Prime Creative Media Pty Ltd v Vranjkovic

REASONS FOR JUDGMENT 1 Before the Court is an application for interlocutory relief which, in essence, seeks to restrain the respondents from making use of information contained in a database to canvass or solicit business from the persons listed in the database; and to restrain the respondents from making any copy of that database or its contents. 2 The applicant, Prime Creative Media Pty Ltd ("Prime") is a publisher and provider of marketing services in the commercial road transport industry. It publishes, amongst other organs, "Trailer Magazine" and derives income from selling advertising space in those organs, preparing graphic designs for websites, press releases and the like, and from selling subscriptions to its magazines. From 5 January 2004, the first respondent, Ms Vranjkovic, was employed by a predecessor company and then, apparently, by Prime, first as editor of what became "Trailer Magazine" and then as Manager of Marketing Services and Account Manager for "Trailer Magazine". In the course of fulfilling her duties in those roles, Ms Vranjkovic compiled a database of "contacts" she had made in the course of her employment. The information in the database, it seems, was taken mainly from business cards which she had collected or from other information acquired in the course of her employment. 3 The evidence also indicates that Prime has, over time, built up and maintained its own database, the "Prime master database", a copy of which in electronic format was a confidential exhibit to the affidavit of John Daniel Murphy, the Managing Director of Prime, sworn on 4 September 2009. It contains more than a thousand names and contact details. 4 On 12 September 2008, Ms Vranjkovic left Prime's employ, having given notice on 2 September. There is some discrepancy in the affidavit evidence about the circumstances of her resignation, although it is not disputed that it was voluntary. In any case, Ms Vranjkovic then posted on line her curriculum vitae, which included some description of the tasks which she had performed whilst in Prime's employ. After correspondence between Ms Vranjkovic and Mr Murphy, this document was edited and reduced in extent. Mr Murphy has deposed that, later; [T]here was cause for me to be a little concerned shortly after [Ms Vranjkovic] had left [Prime]'s employ. I was contacted by several clients on my database informing me that she was contacting them… They informed me that [Ms Vranjkovic] had contacted them by email to say hello and that she was keeping in touch and doing some consulting and public relations work on her own… He therefore, he says, became concerned that Ms Vranjkovic had retained a copy of the Prime master database in her possession, and that she was using it for her own purposes. So he wrote to her, so far as is relevant, in these terms; Can I also please ask that any cd's or hardcopies of email/email backup, editorial contacts and general databases that you may have please be returned… Despite your written assurance, I have been informed by several people last week informing me that you have contacted them wanting to catch up as well as informing them that you are offering "work in the PR / Freelance writing field" Ms Vranjkovic did not specifically respond to Mr Murphy's apparent concern that she then had in her possession a copy of the Prime master database. 5 After working in several other positions, Ms Vranjkovic recently came to work as an employee or contractor for Motoring Matters Pty Ltd ("Motoring Matters"), the second respondent. Motoring Matters publishes a magazine, "PowerTorque Magazine", which, like "Trailer Magazine", is concerned with vehicles deployed in the commercial road transport industry. However, "PowerTorque Magazine" seems to be directed mainly to the operation of those vehicles whereas "Trailer Magazine" concentrates on vehicles and associated equipment available for purchase or lease by operators in that industry. 6 The pivot on which the relief sought by Prime turns, Mr Murphy has deposed, is that; I … believe that [Ms Vranjkovic] has taken one or more databases, including the master database, that is confidential information of the Applicant. I further believe she has disclosed the contents of that database or those databases to [Motoring Matters], which is using them to solicit clients or customers of the Applicant whose contact details appear on the database/s. I fear that advertising customers, subscription customer and marketing services customers will be lost to the Applicant as a result of the First Respondent's disclosure of that confidential information to her new principal, [Motoring Matters]. Prime therefore seeks, as its application reveals, to pursue causes of action including those based on breaches of common law obligations of good faith and fidelity, breach of confidence, breach of the obligations imposed by ss 182 and 183 of the Corporations Act 2001 (Cth) ("the Corporations Act"), and contravention of unspecified provisions of the Copyright Act 1968 (Cth) ("the Copyright Act"). 7 The major premise of Prime's claim for interlocutory relief is that Prime's master database contains information confidential to Prime and that Ms Vranjkovic ought be restrained from making use of that information. In support of that contention, Mr Millar of Counsel, who appeared for Prime, referred to what had been said by Gowans J in Ansell Rubber Co Pty Ltd v Allied Rubber Industries Pty Ltd [1967] VR 37, at 40, in relation to the distinction to be observed between information which an employee may legitimately carry over to his or her next employer, and information which will remain confidential even after the termination of a contract of employment, in the course of which the information has been acquired. His Honour said that; … a distinction has to be maintained between information and knowledge acquired in confidence by an employee during his employment which he uses or discloses for his own advantage while he is still an employee, and information and knowledge so acquired which he uses for his own advantage after his employment is finished. A further distinction has to be drawn between information which forms part of the employee's stock of general knowledge, skill and experience, and that which should fairly be regarded as a separate part of the employee's stock of knowledge (whether it be identifiable as "particular" or "detailed" or "special") which a man of ordinary intelligence and honesty would regard as the property of the former employer. The information in the Prime master database, Mr Millar said, is of the type identified by Gowans J as that which would ordinarily be regarded as the property of Prime. He then contended that Ms Vranjkovic's use of that information to the advantage of Motoring Matters was contrary to Prime's interests and, in itself, a breach of s 182 of the Corporations Act, and that Prime retained the copyright in the master database pursuant to s 35(6) of the Copyright Act. 8 In advancing those submissions, Mr Millar drew an analogy between the circumstances of this case and those discussed by the Supreme Court of South Australia in N P Generations v Fenely (2001) 80 SASR 151. There, the Full Court of that Court was concerned with whether the respondent, who had taken with her, after the cessation of her employment, information about the business of the appellant real estate agent by which she had formerly been employed. She had later used that information to entice business from her former to her new employer. In the passage to which Mr Millar directed particular attention, Debelle J said (at 157) that: … if a departing employee takes with her copies of a list of customers which were initially prepared for legitimate purposes, the departing employee has an obligation to return the copies to her former employer… It follows that, on ceasing her employment, she could no longer use her list of names and addresses. 9 I was then referred to what is sometimes called the "springboard" principle: that is, that a party who has acted in breach of confidence or otherwise unconscionably to gain a "head-start" in a market or commercial activity will be placed at some form of disadvantage by the Court so as to eliminate the advantage which has been unconscionably achieved. This principle, so it was submitted, should be applied in such a way that, where some doubt attends the question of what advantage has actually been obtained or how the restraint to be imposed on the respondent ought to be framed, the Court should err in favour of making a "robust order to restrain an apparent wrong" rather than one which might operate too narrowly; see Wilson Parking Australia 1992 Pty Ltd v Rush [2008] FCA 1601 per Jessup J, at [53], and the authority his Honour there cites, Slevin v Associated Insurance Brokers of Australia (Qld) Pty Ltd (1996) 40 AILR 9-049; see also Roger Bullivant Ltd v Ellis [1987] ICR 464 at 474-5. 10 The authorities, in my view, require a clear distinction to be drawn between a compilation of information made by an employee in the course of his or her employment, such as a list of customers or a rent roll, and another document in which the employee has recorded information which is part of that employee's stock of general knowledge. That distinction was the basis of the different treatment accorded by the Full Court of the Supreme Court of South Australia in N P Generations Pty Ltd v Fenely (supra) to an address book containing, amongst other things, the addresses of landlords who had engaged the appellant real estate agent to manage their properties, and a work diary maintained by the same employee which, as Debelle J observed (at 159), could "provide the base for the preparation of a list of at least some of the appellant's customers". 11 In respect of the address book, Debelle J, with whom Williams J and Wicks J agreed, observed at 157: [19] Thus, it is a breach of good faith and a breach of the equitable obligation to preserve the confidence of an employer if an employee, without the consent of her employer, discloses to persons outside the business information on the list of customers: Faccenda Chicken (at 135-136). Similarly, it is also a breach of good faith and a breach of the equitable obligation to preserve the confidence of an employer if an employee makes a copy of a list of customers of the employer for use after her employment ends (Robb v Green [1895] 2 QB 1; Wessex Dairies Ltd v Smith [1935] 2 KB 80; Faccenda Chicken Ltd v Fowler [1987] Ch 117 (at 136)), or deliberately memorises such a list for that purpose: Faccenda Chicken (at 136); Westminster Chemical NZ Ltd v McKinley [1973] 1 NZLR 659 at 665 per Speight J.