(i) The order of 27 April was made by consent. It was the second order made since the initial ex parte order of 9 March. The defendants were assisted at the making of both the order of 16 March and the order of 27 April by solicitors and counsel. They chose not to file affidavits on either occasion. The unchallenged evidence of Mr Morrow, the solicitor for the plaintiffs, is that the terms of the proposed orders were negotiated throughout the morning of 27 April, that the order of 16 March was the result of similar negotiation, and that the final orders agreed to on 27 April were less advantageous to the plaintiffs than those originally sought by them.
(ii) The effect of the proviso and the further proviso is to permit the defendants to engage in several of the commercial opportunities which Stomp wishes to exploit, and which were among the matters relied upon as justifying the making of the variations sought.
(iii) As I have said, the defendants rely principally on what they say is a changed circumstance in that it is now known that the trial of the proceeding will not take place until at least 8 April 2002, whereas they consented to the order of 27 April on the basis that the interlocutory steps would be completed in time to enable the trial of the proceeding to commence in 2001. However, in so doing they took a calculated risk. It must always have been foreseeable that the timetable set out in the order of 27 April might not be met, and if so, that the defendants would be bound by restraints contained in that order beyond the end of this year. Their legal advisers would have been in a position to estimate the extent of the risk that that would occur. I do not propose, on the material before me, to examine the question of responsibility for the failure to meet the timetable, which does not appear to me to be relevant to the issue before me, noting in particular the effect of the change from an estimate of ten days to an estimate of fifteen.
(iv) Much of the material put before the Court by the defendants went to matters which could have been considered at the making of the order of 27 April had it not been made by consent, and which will be very much in issue at the trial of the action. Those matters include the extent to which the information transferred by White and Bortignon from Rocket to Stomp was in the public domain, or otherwise readily available from other sources, and the importance of that information. In Hutchinson v Nominal Defendant [1972] 1 NSWLR 443 at 448 Isaacs J of the Supreme Court of New South Wales quoted with approval a passage from the judgment of Griffith CJ (as he then was, of Queensland) in Woods v The Sheriff of Queensland (1895) 6 QLJ 163 at 164-165 which reads in part:
The same principle that allows relief to be given against continued operation of a final judgment obviously extends also to giving relief against the continued operation of an interlocutory order if after it is made new facts come into existence or are discovered which render its enforcement unjust. . . . An application for such relief is not in the nature of an appeal or re-hearing; each of these is founded on the contention that the order appealed from ought not to have been made. An application for a new order which has the effect of suspending in whole or in part the operation of a previous order starts with the assumption that the order was rightly made. There is therefore no question of reversing or varying or re-hearing the original decision or order. . . . If it should turn out that the application is based upon the assumption that the order, the operation of which it is desired to modify, was wrongly made, it must fail.
I would with respect adopt that passage, which leads to the conclusion that it is not appropriate that I consider those matters in the context of this application.
(v) Mr Dreyfus, as I have said, relied on the limitation imposed on the continuation of an order of this kind by the springboard principle. An injunction may be granted to prevent a defendant who is in a position to misuse confidential information from using that information as a springboard for engaging in activities detrimental to the person from whom the information was obtained. It is recognised that such an injunction should operate only for a limited period, until there is no longer any potential for the defendant to gain advantage from the possession of the information in question. The principle was enunciated by Lord Justice Nourse in the English Court of Appeal in Roger Bullivant Ltd v Ellis [1987] FSR 172 at 183, where his Lordship said, after reference to authorities:
The purpose of Falconer J in granting the injunction was to prevent the defendants from taking unfair advantage of the springboard which he considered they must have built up by their misuse of the information in the card index. Granted first, that such an advantage cannot last forever, secondly, that the law does not restrain lawful competition and, thirdly, that in restraining unlawful competition it seeks to protect the injured and not to punish the guilty, I cannot see that it is right for the term of the injunction to extend beyond the period for which the advantage may reasonably be expected to continue.
His Lordship cited with approval the statement by Graham J in Harrison v Project & Design Co (Redcar) Ltd [1978] FSR 81 at 87-88, after referring to the springboard doctrine, that:
It may be that in some cases one can fix precisely the date upon which it is clear that something which was once confidential ceased to be so. In other cases there may be no evidence which leads to a precise date. Such date must, however, in my judgment, always be a question of fact to be inferred by the court from all the circumstances of this case.
Mr Dreyfus submitted that the appropriate period for an injunction based on the springboard principle had long expired. The defendants had delivered up all of the information in accordance with paragraph 4 of the order of 27 April, had not used the information since March 2001, had no intention of doing so, and did not seek to have the Court remove the restraint on their doing so.
Whatever may be the effect of the springboard principle on the appropriate period for continuation of the order of 27 April, it is not a matter to be determined on this application. It will be a serious question at the trial of the proceeding, when the plaintiffs will be seeking a permanent injunction, and it would not be appropriate for the Court to determine that question at this stage on an application for variation of the interlocutory injunction. The defendants are protected by the undertaking as to damages given by the plaintiffs on the making of the order of 27 April. As Sir Donald Nicholls VC said in Universal Thermosensors Ltd v Hibben [1992] 1 WLR 840 at 858:
If the defendants have suffered material loss by reason of excessive width in the terms of the injunction sought and obtained by the plaintiff in July 1990, in my view they are entitled to look to the plaintiff for damages pursuant to its undertaking. Plaintiffs, and those who advise them, know or ought to know that there is a risk in obtaining interlocutory injunctive relief: the risk is that the plaintiff may have to pay compensation to the defendant if it turns out at the trial that, having regard to the facts and law as established at the trial, the effect of the injunction was to restrain a defendant from activities it ought to have been at liberty to pursue.
(vi) On 12 April 2001 Rocket distributed a circular setting out what had occurred, including the initiation of the proceeding, and a copy of the order of 16 March was posted on its website. Mr Dreyfus submitted that these actions were intended to create publicity adverse to Stomp. However, both of those actions were taken before 27 April, and they cannot therefore be regarded as new circumstances so as to be relevant to the consideration of the matter before me.
(vii) It is claimed for the defendants that the export by Rocket of products purchased by it from Stomp constitutes a breach of the order. That does not appear to me to be the case, and I see no relevance in it to the issue before me.
(viii) It is also claimed that the solicitor for Rocket expressed a view to the solicitors acting for sanity.com Ltd as to whether particular proposed activities would or would not be prohibited by the order of 27 April, and that this was a ground for varying the order because it was "not appropriate" for him to express such a view. I accept the submission of Mr Cawthorn for the plaintiffs that in so acting the solicitor for Rocket was concerned to ensure that the application of the order of 27 April did not prejudice the rights of third parties, a matter which has now been dealt with, in the case of sanity.com Ltd, by the agreement of the plaintiffs to the further proviso. In any case, the expression of that view is not significant in the context of the issue before me.
(ix) I do not accept the submission of Mr Dreyfus that the expression "or other information" in paragraph 3(e) is "almost incapable of being given any meaning". Further, that expression was in the order of 27 April at the time of its making, and no changed circumstance is relied on to justify the submission that it should be deleted.
(x) The defendants claim to be suffering commercial inconvenience as a result of the order of 27 April in that White and Bortignon are prevented from using their skills, the commercial freedom of the defendants is being restricted, and the defendants are effectively banned from the export music industry.
In Faccenda Chicken Ltd v Fowler [1987] 1 Ch 117 at 135-6 Neill LJ, delivering the judgment of the English Court of Appeal, set out as a principle:
While the employee remains in the employment of the employer the obligations are included in the implied term which imposes a duty of good faith or fidelity on the employee. For the purposes of the present appeal it is not necessary to consider the precise limits of this implied term, but it may be noted: . . . that the duty of good faith will be broken if an employee makes or copies a list of the customers of the employer for use after his employment ends or deliberately memorises such a list, even though, except in special circumstances, there is no general restriction on an ex-employee canvassing or doing business with customers of his former employer:
. . .
Counsel for the plaintiffs indicated that their clients would rely on that principle at the trial of the proceeding. No submission was made for the defendants in response to that indication.
I have already cited the passage from Roger Bullivant Ltd v Ellis in which Lord Nourse emphasised that in restraining unlawful competition the law seeks to protect the injured and not to punish the guilty. Similarly, in Universal Thermosensors, dealing with a claim based on misuse of confidential information, the Vice-Chancellor said at 858:
Undoubtedly the defendants' conduct was outrageous and dishonest. . . . Nevertheless, I must keep in mind that in this action I am concerned, so far as this can now be done, to protect the plaintiff's property and rights and to assess fair compensation for loss suffered. Punishment of the defendants is not my function.
Nor is punishment of the defendants my function on this application. Nevertheless, when the application of the defendants to vary an order to which they consented relies in part on commercial inconvenience which they are suffering as a result of the making of that order, it is relevant to the consideration of the exercise of the Court's discretion to have regard to the accepted responsibility for the events which led to the making of that order.