Plaintiffs v Defendants [2016] VSC 315 | Case summary

Supreme Court of Victoria|2016-06-07|Before: VICKERY J

CONFIDENTIAL INFORMATION - Litigation founded upon the Plaintiffs' allegations of breach of confidence - Defendants allege Plaintiffs themselves in breach of confidence - Alleged misuse of a customer list owned by the Defendants which inadvertently fell into the hands of the Plaintiffs - Misuse in pleading allegations in an amended statement of claim.

1 This application involves a unique circumstance in the evolving law of confidential information. In litigation founded upon the Plaintiffs' allegations of breach of confidence, the Defendants allege that the Plaintiffs themselves are in breach of confidence by what is said to be their misuse of a customer list owned by a Defendant, which inadvertently fell into the hands of the Plaintiffs. The alleged misuse on the part of the Plaintiffs occurred when they made use of the Defendants' confidential information in pleading certain allegations in an amended statement of claim. This conduct has spawned an arguable case where the ancient phrase 'the pot calling the kettle black' has a tale to tell.

2 Two related proceedings were issued by the Plaintiffs - proceeding S ECI 2014 000037 (the 'Breach of Confidence Proceeding') and proceeding S CI 2014 01563 (the 'Inducement Proceeding'). In both proceedings the Plaintiffs, are DC Payments Pty Ltd and DC Payments Australasia Pty Ltd (together referred to as 'DC Payments'). Next Payments Pty Ltd ('Next Payments') is the First Defendant in the Breach of Confidence Proceeding and the Fourth Defendant in the Inducement Proceeding.

3 Both DC Payments and Next Payments, are suppliers of Automatic Teller Machines ('ATM/s') to retail, convenience and hospitality venues. The companies are competitors.

4 The Breach of Confidence Proceeding arises from allegations made by the Plaintiffs that since at least February 2013 certain of the former employees and agents of DC Payments, who are now working for Next Payments have, inter alia, breached their obligations of confidence owed to DC Payments, and have done so in their capacity as employees of Next Payments, by making use of confidential information relating to customers of DC Payments.

5 The Inducement Proceeding arises from further allegations made by the Plaintiffs that a number of merchant customers contracted to DC Payments were induced by Next Payments to, inter alia, break their existing contracts with DC Payments and install a Next Payments ATM or were intending to install a Next Payments ATM.

6 A customer list was maintained by the First Defendant, Next Payments. It listed and recorded details in relation to each merchant with whom Next Payments had a contract. These details were recorded in a spreadsheet which Next Payments called the 'Master Customer List'.

7 The Master Customer List of Next Payments was discovered by DC Payments in this proceeding. It was originally found by DC Payments as an attachment to an email. The email and its attachment had been inadvertently provided to DC Payments by Next Payments in the course of the discovery process.

8 By Summons dated 23 November 2015, Next Payments, being the First Defendant in proceeding S ECI 2014 000037 (the 'Breach of Confidence Proceeding') and the Fourth Defendant in proceeding S CI 2014 01563 (the 'Inducement Proceeding'), brings two applications (the 'Applications'), seeking Orders that, inter alia:

(a) Paragraphs 51-57, 81-83, 92-93, Schedule A and Confidential Schedules B, C and D of the Further Amended Statement of Claim in the Breach of Confidence Proceeding, dated 30 January 2015, be struck out;

(b) The particulars at (xi) [in] paragraph 42 of the Further Amended Statement of Claim in the Inducement Proceeding, dated 27 February 2015, be struck out;

(c) The Plaintiffs, being DC Payments Pty Ltd and DC Payments Australasia Pty Ltd in the Breach of Confidence Proceeding and DC Payments Australasia Pty Ltd in the Inducement Proceeding (together the DC Payments parties are referred to as 'DC Payments') file an affidavit deposing -

(i) To the number of hard copies of the documents that was discovered as document DCP.011.004.0057 (the 'Master Customer List') that it holds or that are held on its behalf;

(iv) Whether any further copies have been made by any persons;

(v) Whether it holds an electronic copy or copies of the Master Customer List and if so, where; and

(vi) To the identify of each employee, servant or agent of DC Payments who has seen a copy of the Master Customer List;

(i) Deliver up all hard copies of the Master Customer List in their possession, custody or power to the solicitors for Next Payments;

(ii) Return any computer disk or other storage device containing copies of the Master Customer List in their possession, custody or power to the solicitors for Next Payments;

(iii) Delete all electronic copies of the Master Customer List;

(iv) Delete or destroy all other documents which contain or record information derived from the Master Customer List; and

(v) Provide written confirmation of compliance with the order to the solicitors for Next Payments.

9 Next Payments also seeks to restrain the solicitors of DC Payments who are alleged to have used the Master Customer List from being retained further.

10 The Applications were heard together on 22 and 23 February 2016.

11 For the purposes of this application, I accept the following as the background facts.

12 The events that have led to the hearing of these Applications can be summarised as follows.

13 On 3 April 2014, DC Payments commenced the Inducement Proceeding against Next Payments seeking, inter alia, injunctive relief and damages against Next Payments for inducing merchants to breach the terms of their contractual relationship with DC Payments.

14 At 2:35 pm, on the afternoon of Tuesday, 15 July 2014, Mr Bosma, being the General Manager of Next Payments' New Zealand business, sent an email (the 'Email') to two employees of Next Payments in New Zealand (Mr Soloman and Mr Whale).

15 The Email on its face was marked 'confidential and internal to Next Payments'.

16 Mr Whale had been, until January 2014, employed by New Zealand ATM Services Ltd, a company now owned by DC Payments.

17 When Mr Bosma sent the Email, he inadvertently included Mr Whale's New Zealand ATM Services Limited email address. This caused the Email to be automatically forwarded to Mr Palinka, who was, until September 2015, the Operating Manager of DC Payments and responsible for the integration of New Zealand ATM Services Ltd's operations into DC Payments' business.

18 Also on 15 July 2014, Mr Palinka and Mr Thomas of DC Payments called DC Payments' Global General Counsel to tell her about the receipt of the Email and Master Customer List. DC Payments' Global General Counsel instructed Mr Palinka to do nothing with the document, tell no one about it and delete the Email and its attachment, being the Master Customer List.

19 DC Payments' Global General Counsel provided the Master Customer List to Ms Dodds, another solicitor employed in DC Payments' legal department and instructed her 'not to disclose the existence or contents of the Next Spreadsheet to anyone else in DC Payments'.

20 DC Payments' lawyers quarantined the Master Customer List on a secured drive and only DC Payments' lawyers and some of its IT staff had access to the document.

21 The Email contained a chain of emails and an attachment, being the Master Customer List of Next Payments.

22 The Master Customer List is an Excel-type document that includes a list of all sites in Australia where, as at the date of the Master Customer List, Next Payments had executed a contract for the supply of an ATM with a merchant. The Master Customer List included the following information:

(a) "Site ID": being a unique site identification number given to the particular site by Next Payments;

(b) "Terminal ID": being a unique terminal (ATM) identification number given to the particular ATM at that site;

(c) "Location Name": the name of the merchant location (i.e. the name of the pub, hotel or convenience store where the ATM is located);

(d) "Location Address", "Suburb", "Post Code" and "State": a field containing all relevant information in relation to the location of a particular merchant;

(e) "ABN/ACN": the Australian Business Number or Australian Company Number of the relevant merchant;

(f) "Business Type": a description of the type of the business where the ATM is located (i.e. cinema, café, pub etc);

(g) "Contract Contact Name" and "Position": the name of the person at the merchant who is the relevant contact for Next Payments in dealing with the ATM contract, and his or her position at the business (i.e. owner, director, CEO etc);

(h) "Contact Number": the contact number for the relevant person at the merchant who is the contact in relation to issues concerning the ATM contract;

(i) "Site Contact Name" and "Position": the name of the person at the merchant who is the relevant contact for day-day-day issues that may arise in relation to the ATM, and his or her position at the business (i.e. Executive Assistant, Manager, director etc);

(j) "Site Contact Number", "Site Fax", "Site Contact Mobile", "Site Contact Email": these all contain contact details for the site;

(k) "Account Name": the name of the 'account' for the merchant's bank account;

(l) "Bank", "BSB", "Account Number": the full bank account details for the relevant merchant;

(m) "Estimated Install Date": the date on which the ATM is to be installed;

(n) "Sales Agent": the sales agent who negotiated the contract with the merchant on behalf Next Payments;

(o) "Comms": which sets out whether the ATM is connected to the internet via a wireless connection or in some other way;

(p) "Gaming": whether gaming is conducted at the merchant's site;

(q) "Max Cash": which shows the maximum cash withdrawal that the ATM is able to dispense;

(r) "DC Fee": which stands for the "Direct Charge Fee", and is the fee that a consumer will pay to use the ATM (i.e. $2.50);

(s) "TXN Threshold": which stands for "Transaction Threshold", and indicates the minimum number of successful transactions that the ATM must perform (if any) in order for the merchant to be paid a rebate;

(t) "Monthly Rebate per Txn": which records the monthly rebate for each transaction that is payable by Next Payments to the merchant under the contract between them (i.e. $1 for each transaction over the transaction threshold);

(u) "First Tier Rebate", "TXN Threshold", "Second Tier Rebate", TXN Threshold", "Third Tier Rebate": which record the levels or "tiers" at which different per transaction rebates will apply. For example, for each transaction under 200 per month, the rebate might be $1 per transaction (First Tier); for each transaction between 200 and 1000 per month, the rebate might be $1.50 (Second Tier); for each transaction above 1000 per month, the rebate might be $2 (Third Tier);

(v) "Shortfall": which records the amount (if any) that the merchant needs to pay Next Payments if the number of successful transactions per month is less than the TXN Threshold;

(w) "Existing ATM": which records whether the site had an ATM before Next Payments installed an ATM at the site, supplied by a competitor of Next Payments;

(x) "Current Monthly TXN": which records or estimates the number of transactions being made on the existing ATM (if any) per month;

(y) "Machine Type": the make of the ATM machine installed at that site;

(z) "Contract Date": the date on which the contract commences;

(aa) "Contract Term": the term of the contract with Next Payments;

(bb) "ATM Funding": which records whether cash is provided to that merchant's ATM by the merchant itself ("self-cashed") or by a secure logistics provider such as Chubb, Prosegur or Armaguard (cash in transit or "CIT");

(cc) "Credit enabled": whether the particular ATM will support credit as well as debit transactions; and

(dd) "Contract Notes": which records specific other details in relation to a particular contract, such as whether a sign on bonus has been offered, whether the contract includes a guarantee as to a specified period of "up time" for the ATM, or any other special conditions included in the contract.

23 On 8 August 2014, DC Payments commenced the Breach of Confidence Proceeding against Next Payments and five of its employees, who had previously been employees of DC Payments, seeking various forms of relief for, inter alia, misuse of DC Payments' confidential information.

24 In the Breach of Confidence Proceeding, DC Payments filed an amended statement of claim on 19 September 2014 and a further amended statement of claim on 30 January 2015.

25 On 17 July 2015, the Court made orders in relation to discovery in the Breach of Confidence Proceeding.

26 On 4 November 2015, DC Payments served its list of discoverable documents in the Breach of Confidence Proceeding. DC Payments' list of discoverable documents in the Inducement Proceeding included 1,728 documents.

27 Upon review of the documents discovered, it became apparent to Next Payments that the Master Customer List had been in the possession of DC Payments by reason of it being attached to the Email.

28 This discovery was followed by a series of email exchanges between Next Payments and DC Payments in relation to the use of the Master Customer List.

Equitable principles relating to breach of confidence

29 It is well-settled that equity can be called upon to restrain the publication of confidential information. In Lord Ashburton v Pape,[2] Swinfen Eady LJ observed that:[3]

The principle upon which the Court of Chancery has acted for many years has been to restrain the publication of confidential information improperly or surreptitiously obtained or of information imparted in confidence which ought not to be divulged.

30 It is now also well-settled that the publication of information which is confidential in nature can amount to an actionable breach of confidence where a person innocently comes into possession of such information either through inadvertence or by some other accidental conduct, either on the part of the recipient of the confidential information or on the part of the owner of the protected material.

31 In Hellewell v Chief Constable of Derbyshire,[4] Laws J made the following observation in relation to accidental conduct on the part of a recipient of confidential information:[5]

If someone with a telephoto lens were to take from a distance and with no authority a picture of another engaged in some private act, his subsequent disclosure of the photograph would, in my judgment, as surely amount to a breach of confidence as if he had found or stolen a letter or diary in which the act was recounted and proceeded to publish it.

32 The observations of Laws J were approved by Gleeson CJ in Australian Broadcasting Corporation v Lenah Game Meats ('Lenah Game Meats'),[6] where his Honour added:[7]

A photographic image, illegally or improperly or surreptitiously obtained, where what is depicted is private, may constitute confidential information.

33 In Trevorrow v South Australia (No 4),[8] Debelle J stated to similar effect that:[9]

The court will restrain publication where the confidential information has been acquired improperly or surreptitiously ... The principle will apply also where a person innocently comes into possession of confidential information through the inadvertence of another. Assume a person inadvertently leaves confidential information in a satchel on a bus. The person finding the satchel opens it for the purpose of obtaining information as to the person who left the satchel behind and in the course of doing so reads confidential information. If necessary, the court will make an order restraining the finder from using that confidential information. In making that order, the court would be enforcing the obligation of conscience arising from the fact that the finder came into possession of the information in circumstances in which it was not intended that the confidential information could be used by the finder.

34 The traditional exposition of the elements that are required for an action for breach of confidence to be made out is set out by Megarry J in Coco v AN Clark (Engineers) Ltd ('Coco'):[10]

[T]hree elements are normally required if ... a case of breach of confidence is to succeed. First, the information itself ... must 'have the necessary quality of confidence about it.' Secondly, that information must have been imparted in circumstances importing an obligation of confidence. Thirdly, there must be an unauthorised use of that information to the detriment of the party communicating it.

35 Coco was cited with approval by Gleeson CJ in Lenah Game Meats:[11]

The usual elements for an equitable remedy are, first, that the information is confidential, secondly, that it was originally imparted in circumstances importing an obligation of confidence, and thirdly, that there has been, or is threatened, an unauthorised use of the information to the detriment of the party communicating it.

36 Central issues in these applications before the Court are the purported character of confidentiality of the Master Customer List and the character of the information alleged to have been used by DC Payments.

37 The essence of the submissions of Next Payments is that the confidentiality of the Master Customer List is to be determined by reference to the document as a whole. It is, therefore, not possible to assess whether there has been a misuse of confidential information by seeking to disaggregate a document into individual pieces of information and then ask whether any individual piece of information is confidential, or to submit that it was not a misuse of confidential information because only part of the information in the document was used.

38 Next Payments submitted that its Master Customer List, in its aggregated form, is a confidential document containing confidential information. It submitted that a duty of confidence arises whenever a person receives information he or she knows, or ought to know, is fairly and reasonably to be regarded as confidential, and includes situations where the information is received as a result of inadvertence or accident, and where the recipient knows, or ought to know, that the confidential information was mistakenly or inadvertently disclosed.

39 Next Payments submitted that DC Payments knew or ought to have known that its Master Customer List had the necessary qualities of confidentiality because:

(a) The Master Customer List contained the information summarised above;[12]

(b) It was plain from the nature of the Master Customer List that the document was commercially sensitive and confidential;

(c) The Master Customer List was attached to the Email which included the statement that the email 'contains confidential information and is intended only for the individual named';

(d) On 15 July 2014, Mr Palinka and Mr Thomas of DC Payments called DC Payments' Global General Counsel to tell her about the receipt of the Email and Master Customer List;

(e) DC Payments' Global General Counsel instructed Mr Palinka to do nothing with the document, tell no one about it and delete the Email and its attachment, being the Master Customer List;

(f) DC Payments' Global General Counsel provided the Master Customer List to Ms Dodds, another solicitor employed in DC Payments' legal department and instructed her 'not to disclose the existence or contents of the Next Spreadsheet to anyone else in DC Payments';

(g) DC Payments' lawyers quarantined the Master Customer List on a secured drive and only DC Payments' lawyers and some of its IT staff had access to the document;

(h) In its Further Amended Statement of Claim dated 30 January 2015, DC Payments pleads that three of its former employees, Wildash, Lester and Beddoe obtained 'the following confidential information (...) (j) customer lists, customer information and terms and conditions of merchants' contracts' [emphasis added]; and

(i) DC Payments' Confidential Particulars dated 30 January 2015 state that:

'the following facts are confidential information about the plaintiff's customer lists, customer information and terms of the merchants' contracts relevant to the plaintiff's claims:

(a) the aggregate of:

(i) the name of the merchant;

(ii) the location of the merchant's premises;

(iii) the merchant's contact details;

(iv) the terms of DC Payments Australasia's contract with the merchant (which are expressly confidential), including any special conditions;

(v) the expiry date of the initial term of the merchant's contract (which is a term of each merchant's contract and therefore expressly confidential.'

40 The essence of the submissions of DC Payments is that that the information that is protected in equity as confidential information must be specifically and properly identified. It submitted that the only information in the Master Customer List that could possibly be claimed to have been misused in the proceedings is limited to:

(a) The names of the merchants then contracted with Next Payments, subsets of which are in Schedules A and B to the pleading in the Inducement Proceeding, and in Schedule A and Confidential Schedules C and D to the pleading in the Breach of Confidence Proceeding; and

(b) The names of Next Payments' customer liaisons, subsets of which ae in Schedules A and B to the pleading in the Inducement Proceeding, and in Schedule A and Confidential Schedules B and C to the pleading in the Inducement Proceeding.

41 However, DC Payments submitted that this customer information is not confidential such that it is protected by equity. They maintain that it is not confidential in an actionable sense because merchant contracts with Next Payments for the supply of an ATM is information that is in the public domain. This is so because the identity of the supplier of an ATM can be easily ascertained by visiting the premises of the merchants and taking note of one or more of the following:

(a) a sign outside the premises stating that a supplier branded ATM is located on the premises;

(b) a sign on the top side of the ATM bearing the logo of the supplier;

(c) a large sticker on the front (below the keypad) and/or side of the ATM bearing the logo of the supplier;

(d) a small sticker between the screen and keypad of the ATM bearing the logo of the supplier; and

(e) the logo of the supplier appearing on the screen of the ATM.

42 In addition, DC Payments submitted that Next Payments' conduct in the Breach of Confidence Proceeding is inconsistent with an assertion of confidentiality over the customer information because:

(a) Schedule A containing the customer information was filed as a non-confidential schedule on 30 January 2015;

(b) In its Defence dated 27 February 2015, Next Payments admitted that it entered into contracts with the merchants listed in Schedule A;

(c) Next Payments has at no time sought orders that Schedule A be protected as a confidential schedule;

(d) There is no suggestion that the information in Schedule A has been misused; and

(e) Consistently with that information not being confidential, Next Payments' counsel told the Court that the name of a merchant with whom DC Payments has contracted cannot, on its own, be confidential information.

43 Further, DC Payments submitted that Next Payments failed to identify the information said to be confidential with the required level of precision.

Legal principles relating to confidential character of information

44 Next Payments referred to a long line of cases where documents, being order-books, card indexes, customer lists, work sheets and lead cards, were found to be confidential information.

45 In Robb v Green,[13] Hawkins J said:[14]

He [defendant's counsel] contends that the order-book of the plaintiff contained no more information than might be acquired by reference to directories and such-like publications ... This to a considerable extent may be true, but it is not so altogether. The order-book contains collected together the names and addresses of purchasers ... No directory would give this information in this collocation ... The names of all the customers are collected together in the order-book in a manner not to be found in any other book or paper to which the defendant had access. To him, therefore, the possession of a copy of the order-book would be peculiarly valuable. He would be saved the expense and delay of searches, such as would be necessary to enable him to compile such a list for himself. Practically, to bring all those names together, even though singly each may appear in some directory or other, would be almost impossible ... By making a copy of the order-book the defendant was able to canvas at once each of his master's customers without trouble or expense and; ... he looked upon the list in that light ... It is the compilation which made the book and the list so valuable to the defendant ...

46 Robb v Green was cited with approval by Nourse LJJ in Roger Bullivant Ltd & Ors v Ellis & Ors:[15]

The value of the card index to the defendants was that it contained a ready and finite compilation of the names and addresses of those who had brought or might bring business to the plaintiffs and who might bring business to them. Most of the cards carried the name or names of particular individuals to be contacted. While I recognise that it would have been possible for the first defendant to contact some, perhaps many, of the people concerned without using the card index, I am far from convinced that he would have been able to contact anywhere near all of those whom he did ...

47 In Telstra Corporation Ltd v First Netcom Pty Ltd ('Telstra Corporation'),[16] the Full Court of the Federal Court (comprising Lockhart, Beaumont and Hill JJ) remarked that:[17]

... a customer list is the most obvious example of information the confidentiality of which the courts will secure by injunctive relief.

48 In EBOS Group Pty Ltd & Ors v Team Medical Supplies Pty Ltd & Ors (No 3) ('EBOS Group'),[18] Katzman J cited Telstra Corporation and stated that 'the customer lists are inherently confidential and capable of protection in equity'.[19] EBOS Group concerned customer databases of a medical supplies company that included, amongst other things, the addresses and telephone and fax numbers of the customers.

49 In International Entertainment New Zealand (No 2) Ltd v Lewis & Ors,[20] Bryson J (as his Honour then was), dealing with company's 'lead cards' and 'work sheets', commented that:[21]

... the lead cards and the work sheet are strongly analogous to customer lists for which confidentiality is readily, perhaps automatically inferred, so that employees and former employees are not entitled to retain, copy or use customer lists.

50 In N P Generations Pty Ltd v Feneley,[22] Debelle J said that:[23]

Whether a customer list is confidential information or not will depend upon the particular facts and circumstances of each case. The list will be confidential if it represents the result of work done by the former employer or if it represents the results of the employer's labour in the composition of the list, experience of the trade and practical utility. This is not an exclusive list of relevant criteria. In this case the list of customers was clearly prepared over a period of time and represented the appellant's work in establishing this part of its business. The rent roll was treated as confidential by the appellant and its employees. It was not available to the public and was plainly of value to the appellant's business. Obviously, the appellant would not disclose the list to other real estate agents. The rent roll was therefore confidential information.

51 In Prime Creative Media Pty Ltd v Vranjkovic,[24] Ryan J stated:[25]

However, I regard the subject information as deriving its confidentiality, not from any secrecy surrounding its bringing into existence, but its presence on a conveniently-arranged list which was not readily accessible to persons other than Ms Vranjkovic and other employees of Prime in their capacity as such employees.

52 DC Payments sought to draw a distinction between the identification of the information deemed to be confidential and the assessment of the confidentiality of information on the evidence.

53 In Seager v Copydex Ltd,[26] Lord Denning MR observed the following about the difficulties encountered when the information in question is of a mixed quality - in part public and in part private:[27]

The principle is clear enough when the whole of the information is private. The difficulty arises when the information is in part public and in part private. As for instance in this case. A good deal of the information which the plaintiff gave to the defendant company was available to the public, such as the patent specification in the Patent Office, or the "Klent" grip, which he sold to anyone who asked. But there was a good deal of other information which was private, such as, the difficulties which had to be overcome in making a satisfactory grip; the necessity for a strong, sharp tooth; the alternative forms of tooth; and the like. When the information is mixed, being partly public and partly private, then the recipient must take special care to use only the material which is in the public domain. He should go to the public source and get it: or, at any rate, not be in a better position than if he had gone to the public source. He should not get a start over others by using the information which he received in confidence. At any rate, he should not get a start without paying for it.

54 In Streetscape Projects (Australia) Pty Ltd & Anor v City of Sydney ('Streetscape'),[28] Barrett JA (with whom Meagher and Ward JJA agreed) said:[29]

Implicit in the statement of principle are two propositions of particular relevance to this appeal: first, that particular information is specifically identified; and, second, that the confidential nature of the identified information is established.

The need for specificity in the identification of the information said to be confidential in respect of which relief is sought comes from the fact that the court must make an assessment of the quality of that information, that is, whether it is in truth of a confidential nature. ... The task of a plaintiff, in this respect, is, in the words of Gummow J in Smith Kline & French Laboratories (Australia) Ltd v Department of Community Services and Health (1990) 22 FCR 73 at 87; [1989] FCA 384; 95 ALR 87 at 102, "to identify with specificity, and not merely in global terms, that which is said to be the information in question".

55 In Wright v Gasweld Pty Ltd ('Gasweld'),[30] Kirby P (as his Honour then was) said:[31]

Determining what is confidential involves a decision on a question of fact

in each case where that quality is asserted. Considerations which courts have found to be relevant, in particular cases, in determining this question include:

a) The fact that skill and effort was expended to acquire the information;

The fact that the information is jealously guarded by the employer, is not readily made available to employees and could not, without considerable effort and/or risk, be acquired by others;

The fact that it was plainly made known to the employee that the material was regarded by the employer as confidential;

The fact that the usages and practices of the industry support the assertion of confidentiality; and
The fact that the employee in question has been permitted to share the information only by reason of his or her seniority or high responsibility within the employer's organisation.

56 Gasweld concerned a restraint of trade agreement between an employer and employee. The information alleged to be a trade secret in included information in relation to the names of Taiwanese suppliers of tools and other items of hardware that were found to be reliable. President Kirby reasoned that 'the information which the employer sought to protect here would not, in the absence of an express covenant have attracted the protection of equity'.[32]

The identity of the three thousand agents and manufacturers in Taiwan is readily available. This information is not confidential. It is in the public domain, or at least easily ascertainable from trade brochures and other like material. What is not in the public domain and what was commercially valuable to the employer, as to Mr Franzi, was information that certain suppliers to it had been proved trustworthy and reliable at certain given prices. This was the information which the employee acquired generally by the course of his employment with the employer and specifically by his visits to Taiwan. Use of such information provided the employee with a comparative advantage in setting up and carrying on his own competing business. It was an advantage which he would not have had if he did not have the employer's confidential information.

58 In Streetscape, the pleaded case was that the information that was subject to an equitable duty of confidence extended to the whole of the 'Intellectual Property', the 'Confidential Information', the 'Product Manual' and the 'Specification', as defined by the licence agreement.

59 I do not accept the contention of DC Payments that equity invariably demands, in a case where a party seeks to lower the curtain of confidentiality in relation to a specifically identified and well-delineated body of information, an exercise in disaggregation of the information and consideration of each sub-set of the information with a view to determining which information is available in the public domain and which is not.

60 In cases such as this, the protection which equity provides in relation to confidential information should make adequate allowance for the skill, effort, time and money expended in acquiring, collating and producing the information in a readily workable and useful form.

Application of the legal principles to the facts

61 I find that the Master Customer List was a detailed and carefully drafted document that is of considerable value to Next Payments. It was also of considerable value to any competitor of Next Payments. The fact that the document contains, in addition to sensitive commercial information, the names of its customers that is ultimately information which is in the public domain, does not detract from its essential characteristic as being confidential.

62 I agree with the observations of Campbell JA in Del Casale & Ors v Artedomus (Aust) Pty Limited,[34] where his Honour, referring to the comments of Megarry J in Coco, said:[35]

On Megarry J's account, the information is "of a confidential nature" if it is not "public property and public knowledge", or if it is "constructed solely from materials in the public domain", to which "the skill and ingenuity of the human brain" has been applied. ... This is a fairly undemanding test.

63 I am satisfied that the Master Customer List, being a product of the skill, effort and ingenuity of Next Payments and its employees, represents confidential information.

64 I am supported in this finding by a number of factors, namely that:

(a) the information was guarded by Next Payments through various internal measures and was not readily available to unauthorised persons within the organisation of Next Payments, let alone 'outsiders';[36]

(b) it was plainly made known to employees that the material was regarded by the employer as confidential;[37]

(c) the Master Customer List contained all of the important information about merchants who had entered into contracts with Next Payments;[38]

(d) the employee in question has been permitted to share the information only by reason of his or her seniority or high responsibility within the organisation of Next Payments;[39] and

(e) a competitor, DC Payments, was likely to be advantaged by coming into possession of the Master Customer List by reason that it contained all of the important information about merchants who had entered into contracts with Next Payments.

65 Having concluded that the Master Customer List is characterised as confidential information, I turn now to consider the alleged misuse of the information by DC Payments.

Misuse of the Master Customer List by DC Payments

66 Next Payments submitted that an inference should be drawn that DC Payments used its Master Customer List in the drafting of Confidential Schedule A to the Further Amended Statement of Claim filed by DC Payments dated 30 January 2015. Such inference is said to be drawn from the following facts, which I find are established:

(a) Each merchant listed in Confidential Schedule A to the Further Amended Statement of Claim served on 8 August 2014 is included in the Master Customer List;

(b) DC Payments failed to provide any evidence or explanation as to how it obtained details of merchants included in Confidential Schedule A'. DC Payments had the opportunity to explain how they came upon the information, but elected not to do so;

(c) All of the details in the Master Customer List regarding the name of the sales agent who approached the merchant on behalf of Next Payments, being Chris Egan-Lee for Unigas Homebush, matches the name included in Schedule A to the Statement of Claim, save for two discrepancies;

(d) The absence of any explanation or evidence from DC Payments as to how it obtained the details of the name of the sales agent who approached the merchant on behalf of Next Payments. In particular, DC Payments has adduced no evidence which:

(i) Suggests that, independently of the Master Customer List, DC Payments knew the identity of the Next Payments employee or agent who dealt with each of the 150 or so merchants; and

(ii) Explains how DC Payments could have known the identity of each Next Payments employee without using the Master Customer List;

(e) Where the sales agent is undisclosed in the Master Customer List it is also undisclosed in Confidential Schedule A, save for three exceptions;

(f) One merchant who was formerly a customer of DC Payments contracted with Next Payments between the date that the Master Customer List was received by DC Payments, being 15 July 2014, and the date the Further Amended Statement of Claimed was filed, being 8 August 2014. The merchant, therefore, does not appear in the Master Customer List and similarly does not appear in Confidential Schedule A;

(g) Drafts of the statement of claim in the Breach of Confidence Proceeding prepared prior to DC Payments receiving the Master Customer List included no details of merchants now contracted with Next Payments, as to which:

(i) A draft as at 3 July 2014 is at Exhibit FJH-30. Paragraphs 84-86 of that draft indicate that no instructions had at that time been given to Counsel as to merchants contracted by Next Payments, or the identity of the Next Payments' employee or agent who negotiated the contract;

(ii) A draft as at 24 July 2014 is at Exhibit FJH-31. Paragraphs 63-64 indicate that no instructions had at that time been given to Counsel as to merchants contracted by Next Payments, or the identity of the Next Payments' employee or agent who negotiated the contract;

In contrast, the Statement of Claim as filed, included Confidential Schedule A which identified (for the first time) the identity of various merchants and the identity of the Next Payments' agent or employee who negotiated with that merchant (being information found in the Master Customer List);

(h) Senior Counsel for DC Payments stated in open Court on 29 August 2014 that DC Payments commenced the Breach of Confidence Proceeding 'because shortly prior to issuing this proceeding, more information fell into our hands';

(i) DC Payments claimed litigation privilege over an email by which the Master Customer List was sent by Mr Palinka to DC Payments' Global General Counsel;

(j) DC Payments has not denied using the Master Customer List to draft Confidential Schedule A, and has adduced no evidence to suggest that it was not used;

(k) FJH-33 is a spreadsheet that a solicitor for the defendant in these proceedings, Ms Hudgson, says was provided by DC Payments to Ashurst Australia on 3 July 2014. The spreadsheet only identified 20 or so of its former merchants that DC Payments believed may now have contracted with Next Payments. It is therefore evident that at this time DC Payments did not know of at least 130 or so merchants who were subsequently listed in Confidential Schedule A to the Further Amended Statement of Claim;

(l) Ms Howard's affidavit identifies 22 merchants which she says DC Payments thought, as at 15 July 2014, may have installed or intended to install a Next Payments ATM. It is therefore evident that at this time DC Payments did not know of at least 130 or so merchants who were subsequently listed in Confidential Schedule A to the Further Amended Statement of Claim; and

(m) DC Payments' written submissions on this application refer to:

a) "the use of the customer list" by DC Payments;

b) "the limited use they [DC Payments] have made of the information in the customer list;"

c) "the limited use and disclosure of the information in the customer list" by DC Payments;

d) The fact that "no commercial use [was made] of the information contained in those documents"(emphasis added).

67 Next Payments also submitted that an inference can be drawn that DC Payments used the Master Customer List in making amendments to paragraph 42 (particular (xi)) and including Schedules A and B to the Statement of Claim in the Inducement Proceeding. Such inference is said to be drawn from the following facts, which I find are established:

(a) Of the 18 merchants listed in Schedules A and B (which were added after receipt of the Master Customer List), all but four of those merchants appear in the Master Customer List;

(b) The absence of any explanation or evidence from DC Payments as to how it obtained details of the information referred to above (i.e. the identity of 14 customers, which was included in the schedules), if not from the Master Customer List;

(c) DC Payments has not denied using the Master Customer List to draft the amendments to the statement of claim, including drafting the schedules to the pleading, and has adduced no evidence to suggest that it was not used;

(d) DC Payments' written submissions in this application refer to:

"the limited use they [DC Payments] have made of the information in the customer list;"

"the limited use and disclosure of the information in the customer list" by DC Payments; and

The fact that "no commercial use [was made] of the information contained in those documents".

68 I find on the facts which have been established that that a clear inference is be drawn that DC Payments used the Master Customer List in the drafting of Confidential Schedule A to the Further Amended Statement of Claim filed by DC Payments dated 30 January 2015 in the Confidential Information Proceeding.

69 I further find that a clear inference is to be drawn that DC Payments used the Master Customer List in making amendments to paragraph 42 (particular (xi)) and including Schedules A and B to the Statement of Claim in the Inducement Proceeding.

70 I make these findings upon the degree of satisfaction described by Dixon J in Briginshaw v Briginshaw.[40]

71 These findings give rise to a further finding that DC Payments misused the confidential information which inadvertently fell into its hands, which information was known to it to be confidential, by making use of the material for the purposes of re-drafting its pleadings in both the Confidential Information Proceeding and the Inducement Proceeding.

72 Next Payments based its Applications on the alleged breach of confidence on the part of DC Payments and seeks relief in equity.

73 In all likelihood, there was no need for DC Payments to have relied upon or made use of the Master Customer List in pleading its case. Well drafted interrogatories of the defendants directed to questions in the proceedings, administered in accordance with O 30 of the Supreme Court (General Civil Procedure) Rules 2015 (Vic), may well have revealed the necessary information. DC Payments did not seek to administer interrogatories at any stage in either proceeding.

74 Next Payments submitted that an order striking out the affected paragraphs of the Statement of Claim is justified by the principle that orders should be made to deny the wrongdoer the benefit of using the confidential information and to ensure that no advantage is obtained in the litigation arising from the breach of confidence.

75 The principle was stated in Terrapin Ltd v Builders' Supply Co (Hayes) Ltd:[41]

... a person who has obtained information in confidence is not allowed to use it as a springboard for activities detrimental to the person who made the confidential information.

76 The principle in Lord Ashburton v Pape outlined in paragraph [29] of these reasons was discussed by the Campbell J (as his Honour then was) in AG Australia Holdings Ltd v Burton,[42] where his Honour stated:[43]

When a court grants remedy to enforce an equity of confidence, it aims to provide a remedy which ensures that the defendant gains no advantage from there having been a breach of confidence.

Plaintiffs v Defendants

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