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Supreme Court of the ACT |
Last Updated: 27 October 2009
FINANCIAL INTEGRITY GROUP PTY LIMITED v SCOTT FARMER AND
BRAVIUM PTY LIMITED
[2009] ACTSC 143 (27 October 2009)
EMPLOYMENT LAW – post-employment restraint of trade clause
– provision of financial advice to former employer’s customers
–
Australian Workplace Agreements – never certified by the Office of
the Employment Advocate – Agreements “of no
effect”,
Workplace Relations Act 1996 (Cth), s 170VD.
EMPLOYMENT LAW
– implied confidentiality clause – fiduciary duty of confidentiality
– whether applicable post-employment –
retention of computer with
former employer’s customer information – whether confidential
– whether former employee
simply competing or deliberately retained lists
with a view to compete.
PRACTICE AND PROCEDURE – application in
proceeding – summary dismissal – originating application dismissed
in part – facts in dispute
– evidence admissible on application
– some evidence to support originating application – inappropriate
to resolve
factual dispute on such application.
EQUITY –
application for equitable relief – third party without notice of
confidentiality may be restrained – equitable
damages – jurisdiction
of the Australian Capital Territory Supreme Court – whether such
jurisdiction repealed by Australian Capital Territory Supreme Court
(Transfer) Act 1992 (Cth) – whether grant of general jurisdiction
sufficient.
PRACTICE AND PROCEDURE – pleadings deficient –
embarrassing and insufficiently particularised – struck out in part
– leave to apply
to replead.
PRACTICE AND PROCEDURE –
delay – judicial disability – workload of the
Court.
Corporations Act 2001 (Cth), s 119
Workplace Relations
Act 1996 (Cth), Pt VIA, ss 170VA, 170VC, 170VD, 170VF, 170
WL
Industrial and Employee Relations Act 1994 (SA), s
154
Chancery Amendment Act 1858 (UK) (21 & 22 Vic c
27)
Equity Act 1901 (NSW), s 9
Seat of Government Supreme Court
Act 1933 (Cth)
Australian Capital Territory Supreme Court (Transfer)
Act 1992 (Cth)
Australian Capital Territory Self-Government Act
1988 (Cth), s 34
Supreme Court Act 1933 (ACT), s 20
Supreme
Court Act 1970 (NSW), ss 23, 68
Constitution Act 1975 (Vic),
s 85(1)
Supreme Court Act 1986 (Vic), s 38
Court Procedures Rules 2006 (ACT), rr 1146, 1147, 1149
Supreme
Court Rules 1937 (ACT), O 15 R 1, O 17 R 1
New South Wales Acts
Application Ordinance 1985 (Cth), s 3
Fetter J and Mitchell R, “The Legal Complexity of Workplace
Regulation and Its Impact upon Functional Flexibility in Australian
Workplaces” (2004) 17 Australian Journal of Labour Law
276
Creighton B and Stewart A, Labour Law
(4th ed, The Federation Press, 2005)
Dal Pont GE
and Chalmers DRC, Equity and Trusts in Australia
(3rd ed, Lawbook Co, 2004)
Senate Standing
Committee on Regulations and Ordinances, 76th Report,
Report Upon a Certain Ordinance of the Australian Capital Territory
Disallowed by Effluxion of Time (Commonwealth Government Printer, 1986)
(Parliamentary Paper 507 of 1985)
Dey v Victorian Railways Commissioners [1949] HCA 1; (1948) 78 CLR 62
General
Steel Industries Inc v Commissioner for Railways (NSW) and Ors [1964] HCA 69; (1964) 112
CLR 125
Wentworth v Rogers (No 5) (1986) 6 NSWLR 534
Stergiou
& Ors v Citibank Savings Ltd (1998) 148 FLR 244
Republic of Peru v
Peruvian Guano Company Ltd (1887) 36 Ch D 489
Castlemaine Perkins Ltd
v Queen St Hotels Pty Ltd & Ors [1968] Qd R 501
Harry Smith Car
Sales Pty Ltd v Claycom Vegetable Supply Co Pty Ltd (1978) 29 ACTR
21
Trinity Enterprises Pty Ltd v Drum Services (WA) Pty Ltd & Ors
(1992) 7 WAR 587
Kays Holdings Pty Ltd v Nassar (1967) 69 SR (NSW)
231
Spellson v George and Ors (1992) 26 NSWLR 666
Yurong
Holdings Pty Ltd v Renella [2005] SAIRC 60
Renella v Yurong Holdings
Pty Ltd [2005] SAIRC 26
McLennan v Surveillance Australia Pty Ltd
[2005] FCAFC 46; (2005) 142 FCR 105
Hogan v Employment National (Administration) Pty
Ltd (2002) 119 IR 59
Hastings v J H Corporate Security Services Pty
Ltd [2000] SASC 216
New Zealand Shipping Co Ltd v AM Satterthwaite
& Co Ltd [1974] UKPC 1; [1975] AC 154
Integrated Computer Services Pty Ltd v
Digital Equipment Corp (Aust) Pty Ltd (1988) 5 BPR 11,110
Damevski v
Giudice & Ors (2003) 133 FCR 438
Del Casale and Ors v
Artedomus (Aust) Pty Ltd (2007) 73 IPR 326
Faccenda Chicken Ltd v
Fowler & Ors [1985] 1 All ER 724
Stevenson Jordan and Harrison
Ltd v MacDonald and Evans (1952) 69 RPC 10
O’Brien & Ors v
Komesaroff [1982] HCA 33; (1982) 150 CLR 310
Peninsular Real Estate Ltd v Harris
[1992] 2 NZLR 216
NP Generations Pty Ltd v Feneley [2001] SASC 185; (2001) 80 SASR
151
Moldex Ltd v Recon Pty Ltd [1948] VLR 59
Printers &
Finishers Ltd v Holloway & Ors (No 2) [1964] 3 All ER 731
Malone v
Metropolitan Police Commissioner [1979] 1 Ch 344
Barbagallo & Anor
v J & F Catelan Pty Ltd & Ors [1986] 1 Qd R 245
Leeds
Industrial Co-Operative Society Ltd v Slack [1924] AC 851
Kelly v Apps
[2000] FCA 687; (2000) 98 FCR 101
Travini v Starczewski [2009] ACTSC 123
JUDGMENT
No. SC 589 of 2007
Judge: Refshauge J
Supreme Court of the ACT
Date: 27 October 2009
IN THE SUPREME COURT OF THE )
) No. SC 589 of
2007
AUSTRALIAN CAPITAL TERRITORY )
BETWEEN: FINANCIAL INTEGRITY GROUP PTY LIMITED (ACN 098 377 087)
Plaintiff
AND: SCOTT FARMER
First Defendant
AND: BRAVIUM PTY LIMITED
(ACN 124 325 211)
Second Defendant
ORDER
Judge: Refshauge J
Date: 27 October 2009
Place: Canberra
THE COURT ORDERS THAT:
1. Paragraphs 3.b, 3.b.1, 3.b.2, 3.b.3, 4, 8, 9 and 12 of the Amended Statement
of Claim be struck out.
2. The words “first defendant in breach of his
restraint and further the” and “provide investment and financial
advice and services and” in paragraph 10 be struck out.
3. The words
“by providing investment and/or insurance and/or financial advice and
services and/or” in paragraph 10.a
be struck out.
4. That the plaintiff
have leave to apply to Justice Refshauge within 28 days or such further time as
the Court may allow for leave
to amend the Amended Statement of Claim, such
application to be accompanied by a draft of the Statement of Claim as it is
proposed
to be amended.
5. If the plaintiff does not make an application to
amend the Statement of Claim in accordance with this order, the balance of the
Statement of Claim be struck out on 1 December 2009 and the defendants be
entitled to enter judgment with costs.
6. The parties have 7 days within
which to file and serve any written submissions as to costs.
1. The law regulating the employment of persons is complex and a mixture of
common law and statute. Even with advice, as this case
shows, difficulties can
arise which might be unforseen to either or both of the parties to an employment
relationship.
2. The plaintiff, Financial Integrity Group Pty Limited
(Financial Integrity), employed the first defendant, Scott Farmer (Mr Farmer),
from 23 November 2004 until 25 April 2007. After his employment with Financial
Integrity ceased, Mr Farmer became employed by the
second defendant, Bravium Pty
Limited (Bravium) and Financial Integrity says that he breached a restraint of
trade condition of his
employment and improperly used confidential information
he had obtained while employed by Financial Integrity when he approached
clients
of Financial Integrity and provided services to them.
3. Financial Integrity
then commenced these proceedings seeking damages or equitable compensation or
account of monies received by
Mr Farmer and Bravium in breach of the alleged
fiduciary duties.
4. Mr Farmer and Bravium have defended the proceedings and
now apply for summary judgment saying that the plaintiff’s action
cannot
succeed.
The application
5. The application was brought by Application in
Proceedings dated on 19 October 2007 and heard on 20 March 2008. The delay in
having
it heard was probably caused by the fact that in the last quarter of
2007, this Court had only half its complement of resident judges,
and in
particular that Connolly J, who had been dealing with the matter, died on 25
September 2007. The delay in delivering judgment
is regrettable but due to the
workload of the Court.
6. The application was supported by an affidavit of Mr
Farmer made on 15 October 2007.
7. Financial Integrity relied on
affidavits filed in support of an Application in Proceedings of 28 August
2007 for interim orders
which were made by Connolly J on that day and then
continued on 31 August 2007. With the agreement of all parties, I discharged
those orders on 20 March 2008.
8. The affidavits on which the plaintiff
relied included an affidavit of Jason Hedlund, the Managing Director of
Financial Integrity,
made on 27 August 2007, to which were exhibited, inter
alia, two documents purporting to be the employment agreements under which
Mr Farmer had been employed.
9. In addition, I received two affidavits
of persons, Aaron Downey and Drew Miller, each of whom described himself as
“a partner
of the Plaintiff” even though there was no evidence of a
partnership or of what such partnership comprised. I also read an
affidavit of
Marcus Walsh, an employee of Financial Integrity.
10. During the proceedings,
Mr F J Purnell SC, counsel for Financial Integrity, initially sought leave to
amend the Statement of Claim.
Subsequently, he expressly withdrew that
application.
11. This application is brought under r 1147 of the Court
Procedures Rules 2006 (ACT) (the Rules). Although most applications for summary
judgment are brought by plaintiffs under r 1146, the leading cases
on
summary judgment applications, Dey v Victorian Railways Commissioners
[1949] HCA 1; (1948) 78 CLR 62; General Steel Industries Inc v C ommissioner
for Railways (NSW) and Ors [1964] HCA 69; (1964) 112 CLR 125, are in fact both cases where
defendants sought summary judgment against the plaintiff.
12. The principles
on which such applications are determined are generally not in doubt. The
applicants, in this case, Mr Farmer
and Bravium, face a very high
threshold. The test to be applied was expressed by Dixon J in Dey v Victorian
Railways Commissioners
(at 91) as being reserved for “exercise as to
actions that are absolutely hopeless”.
13. In General Steel Industries
Inc v Commissioner for Railways (NSW) and Ors, Barwick CJ said (at 129-30) in a
passage since quoted
many times:
I have examined the case law on the subject, to some of which I was referred in argument and to which I append a list of references. There is no need for me to discuss in any detail the various decisions, some of which were given in cases in which the inherent jurisdiction of a court was invoked and others in cases in which counterpart rules to Order 26, r 18, were the suggested source of authority to deal summarily with the claim in question. It is sufficient for me to say that these cases uniformly adhere to the view that the plaintiff ought not to be denied access to the customary tribunal which deals with actions of the kind he brings, unless his lack of a cause of action – if that be the ground on which the court is invited, as in this case, to exercise its powers of summary dismissal – is clearly demonstrated. The test to be applied has been variously expressed; “so obviously untenable that it cannot possibly succeed”; “manifestly groundless”; “so manifestly faulty that it does not admit of argument”; “discloses a case which the Court is satisfied cannot succeed”; “under no possibility can there be a good cause of action”; “be manifest that to allow them” (the pleadings) “to stand would involve useless expense”.
At times the test has been put as high as saying that the case must be so plain and obvious that the court can say at once that the statement of claim, even if proved, cannot succeed; or “so manifest on the view of the pleadings, merely reading through them, that it is a case that does not admit of reasonable argument”; “so as to speak apparent at a glance”.
As I have said, some of these expressions occur in cases in which the inherent jurisdiction was invoked and others in cases founded on statutory rules of court but although the material available to the court in either type of case may be different the need for exceptional caution in exercising the power whether it be inherent or under statutory rules is the same. Dixon J (as he then was) sums up a number of authorities in Dey v Victorian Railways Commissioners where he says: “A case must be very clear indeed to justify the summary intervention of the court to prevent a plaintiff submitting his case for determination in the appointed manner by the court with or without a jury. The fact that a transaction is intricate may not disentitle the court to examine a cause of action alleged to grow out of it for the purpose of seeing whether the proceeding amounts to an abuse of process or is vexatious. But once it appears that there is a real question to be determined whether of fact or law and that the rights of the parties depend upon it, then it is not competent for the court to dismiss the action as frivolous and vexatious and an abuse of process.” Although I can agree with Latham CJ in the same case when he said that the defendant should be saved from the vexation of the continuance of useless and futile proceedings, in my opinion great care must be exercised to ensure that under the guise of achieving expeditious finality a plaintiff is not improperly deprived of his opportunity for the trial of his case by the appointed tribunal. On the other hand, I do not think that the exercise of the jurisdiction should be reserved for those cases where argument is unnecessary to evoke the futility of the plaintiff’s claim. Argument, perhaps even of an extensive kind, may be necessary to demonstrate that the case of the plaintiff is so clearly untenable that it cannot possibly succeed. [footnotes omitted]
14. These passages have been referred to in many cases over the years and there
is not much to be gained from referring to the many
applications to which they
have been put.
15. It is, however, useful to refer to make some additional
comments. For example, it is clear that the application must address
the
substance of the claim made and not merely the expression of it: Wentworth v
Rogers (No 5) (1986) 6 NSWLR 534 (at 536); Stergiou & Ors v Citibank
Savings Ltd (1998) 148 FLR 244 (at 249). As Chitty J said in Republic of
Peru v Peruvian Guano Company Ltd (1887) 36 Ch D 489 (at 496):
Under the new rule the pleading will not be struck out unless it is demurrable and something worse than demurrable. If, notwithstanding defects in the pleading, which would have been fatal on a demurrer, the Court sees that a substantial case is presented the Court should, I think, decline to strike out that pleading; but when the pleading discloses a case which the Court is satisfied will not succeed, then it should strike it out and put a summary end to the litigation.
16. For this purpose, I note that the pleading the subject of an application
includes any particulars properly provided, whether
in the pleading or
separately: Castlemaine Perkins Ltd v Queen St Hotels Pty Ltd & Ors [1968]
Qd R 501 (at 507).
17. Mr Purnell SC in his written submissions stated that
evidence was not admissible on the application. That is not so and has never
been so. Indeed, a plaintiff seeking summary judgment was always required to
file an affidavit deposing to a belief that the defendant
had no defence to the
claim: Harry Smith Car Sales Pty Ltd v Claycom Vegetable Supply Co Pty Ltd
(1978) 29 ACTR 21 (at 23).
18. The requirement for an affidavit or affidavits
is preserved in r 1149 of the Rules; indeed, the rule makes a supporting
affidavit
mandatory unless the court grants leave. It is, however, no longer
required that the applicant depose to a belief that the defendant
has no defence
as was required under O 15 R 1 of the Supreme Court Rules 1937 (ACT). The
defendant, however, was always at liberty
to show a good defence on the merits
(O 17 R 1) and still may (r 1147(2)(b)).
19. It is clear, however, that the
use of these affidavits is not designed to encourage, or perhaps even permit,
the court to adjudicate
on matters of fact. The rules themselves do not permit
the deponents of affidavits to be cross-examined without leave (r 1149(4))
and such leave will not readily be granted: Trinity Enterprises Pty Ltd
v Drum Services (WA) Pty Ltd & Ors (1992) 7 WAR 587. No deponent of
any affidavit received by me in this application was cross-examined. The courts
have made it clear that it is inappropriate
to proceed to summary judgment where
there is a conflict on matters of fact: Kays Holdings Pty Ltd v Nassar (1967)
69 SR (NSW) 231 (at 242) per Sugerman JA (with whom Jacobs JA agreed); Spellson
v George and Ors (1992) 26 NSWLR 666 (at 678).
20. That does not mean,
however, that complex questions of law might not be raised and resolved in a
summary judgment application.
As Dixon J said (at 91) in Dey v Victorian
Railways Commissioners:
The fact that a transaction is intricate may not disentitle the court to examine a cause of action alleged to grow out of it for the purpose of seeing whether the proceeding amounts to an abuse of process or is vexatious.
See also per Barwick CJ (at 130) in General Steel Industries Inc v Commissioner
for Railways (NSW) and Ors: set out above (at [13]).
21. Bearing these
principles in mind, I now turn to the facts of this case.
The
facts
22. Financial Integrity is a company registered under the Corporations
Act 2001 (Cth) (see s 119 of that Act) and is thus incorporated and entitled to
sue in its corporate name. The company’s business is financial planning,
providing investment and insurance advice to a range of clients.
23. Mr
Farmer was employed by Financial Integrity on 23 November 2004 as a financial
advisor. His duties included servicing of and
provision of financial advice to
clients of Financial Integrity. He signed a document on 23 November 2004 (the
first Document) which
was apparently intended to set out the terms of his
employment.
24. The first Document was described on the front page as an
“Australian Workplace Agreement” and was said to be an
“Agreement
under section 170VF Australian Workplace Relations Act (Cth)
[sic] 1996”.
25. It contained detailed provisions in relation to
confidential information and post-employment restrictions. These were set out
in cll 29 and 31 of the first Document as follows:
29 Confidential Information
29.1 “Confidential Information” means any of the following information which is obtained by you in the course of or as a result of your employment:
(a) information which is marked “Confidential” or which is described or treated by us as confidential;
(b) information of a business-sensitive nature; and
(c) trade secrets.
9.2 Without limiting the generality of the above, the following specific information is Confidential Information:
(a) the names and addresses of our customers and clients;
(b) the terms upon which we contract or provide services to these customers and clients;
(c) our business plans and forecasts;
(d) personal details of any of our employees or of their contracts;
(e) the terms upon which we engage employees and contractors including fees, commissions and remuneration packages; and
(f) our training procedures, techniques and publications.
29.3 Confidential Information is not limited only to our information, but also includes information of our Related Bodies Corporate, clients, contractors, and employees.
29.4 Confidential Information does not include information which is readily available to the general public.
29.5 You must not use or disclose Confidential Information during or after your employment except in the following circumstances:
(a) we have given you our prior written consent following your request; or
(b) in the proper course of performing the duties of the Position that you hold and for the benefit of FIG; or
(c) to the extent required by law.
29.6 You must immediately notify us if you suspect that Confidential Information has been improperly used or disclosed by anyone else.
29.7 You are required to take all reasonable steps to prevent the unauthorised disclosure or use of Confidential Information to any other party.
29.8 You are required to execute all other confidentiality agreements which may be required from time to time which are designed to protect Confidential Information which we believe on reasonable grounds has come to your attention.
29.9 You must not copy or remove from our premises any Document which contains Confidential Information without our prior consent.
...
31.1 You acknowledge that your remuneration under this Agreement incorporates consideration for the restraints in this clause 31.
31.2 You agree that you are restrained from directly or indirectly:
(a) consulting with or advising any person who or which was a customer of you or us;
(b) engaging in any business of providing any services to any person with whom you have had any contact or dealt with in the course of your employment and who at any time during the continuance of your employment was a client or customer of you or us nor will you attempt to do any of those things or induce (or attempt to induce) any other person to do any of those things;
(c) engaging in any business or providing any services to any person who or which was a client or customer of FIG notified to you in writing nor will you attempt to do any of these things or induce or attempt to induce any other person to do any of these things; or
(d) either on your own account or for or with any other person soliciting, interfering with or endeavouring to entice away from us, any person who was an employee during the continuance of your employment or encourage any other person to do so.
31.3 The restraint pursuant to clause 31.2 operates during each of the following periods:
(a) the period of three years from the date of termination of your employment;
(b) the period of two years from the date of termination of your employment; and
(c) the period of one year from the date of termination of your employment.
31.4 The restraint pursuant to clause 31.2 insofar as it relates to:
(a) any of the activities set out in clause 31.2 is separate, distinct and severable from any other activity set out in clause 31.2; and
(b) any periods referred to in clause 31.3 is separate, distinct and severable from any other period set out in clause 31.3,
and should any of the activities or periods referred to in clause 31.2 or 31.3 be or become invalid or unenforceable that shall not affect the validity or enforceability of any of the other activities or periods.
31.5 You agree that the restraints contained in this Agreement are reasonable and necessary for the protection of our business.
26. Mr Purnell SC also referred to cl 32 which was in the following terms:
32 Conflict of interest
32.1 You are free to obtain additional income through other employment or business venture provided that:
(a) your work performance with us is not affected;
(b) no conflict of interest occurs in your role with our business;
(c) our objectives are not disadvantaged;
(d) our resources are not used in your venture; and
(e) you do not use time for which you will receive a benefit from or are paid by us to further your own interests.
If any doubt exists regarding the above points, the onus is on you to inform us in writing of the nature of the venture.
There was, however, no evidence before me as to whether Mr Farmer did engage in other employment or business ventures when employed by Financial Integrity.
27. The first Document was said to come into effect on the date of offer of employment but subject to certification by the Office of the Employment Advocate. That is to say, cl 4.1 was in the following terms:
This Agreement will come into effect on the date that you are offered employment under this Agreement with us subject to its certification by the Office of the Employment Advocate (OEA).
28. The Managing Director of Financial Integrity, Mr Jason Hedlund, deposed in
his affidavit that the first Document was not certified
by the Office of the
Employment Advocate as Financial Integrity received legal advice that it was not
required to have the agreement
certified to make it enforceable. Thus, it would
appear that, in its terms, it did not come into effect.
29. It was further
admitted by Financial Integrity that no filing receipt from the Office of the
Employment Advocate or approval notice
issued by that Office was in existence in
respect of the first Document.
30. Mr Farmer carried out the duties that were
set out in the first Document and was also paid remuneration and other benefits
that
were set out in it.
31. For reasons that were not explained to me, a
further document was executed by Financial Integrity and Mr Farmer on 9 December
2005 (the second Document). That was a similar document. It had a provision,
cl 4.1, identical to that in the first Document.
It also had provisions
relating to confidential information, post-employment restrictions and conflict
of interest. So far as I
could tell the provisions were the same as in the
first Document. It was also described as an Australian Workplace Agreement in
the same way as the first Document. It was also admitted that it had not been
submitted to the Office of the Employment Advocate
and that neither a filing
receipt or approved notice existed in respect of it. I will refer to the first
Document and the second
Document together in these reasons as the two
Documents.
32. Mr Farmer resigned his employment on 11 April 2007 and ceased
employment on 25 April 2007.
33. It appears that on 8 March 2007, Mr
Farmer had registered, and therefore incorporated, Bravium and became its
director and its
only director. That company, it appears, also engages in
financial planning.
34. It appears that some time after Mr Farmer left the
employment of Financial Integrity, he contacted a number of clients to whom
Financial Integrity had provided financial services while he was an employee of
Financial Integrity and transferred their business
to Bravium.
35. There was
then, unsurprisingly, correspondence between the parties, and later through
their solicitors, in which Financial Integrity
sought to restrain Mr Farmer from
approaching its clients and seeking to restrict his activities in accordance
with the terms of
the two Documents. That effort clearly failed and, as a
result, these proceedings were commenced.
The proceedings
36. In the
Amended Statement of Claim, Financial Integrity pleaded that Mr Farmer was
employed for the period referred to above (at
[2]) under two written contracts.
It identified the contracts as those signed by Mr Farmer, being the two
Documents, called Australian
Workplace Agreements. It then referred to the
obligations under them, which it pleaded that he had breached. As a result,
Financial
Integrity claimed “damages and/or equitable compensation and/or
an account of monies received by the first defendant or second
defendant in
beach [sic] of the said fiduciary relationship and/or said fiduciary
duties” and interest.
37. Mr Farmer filed a Defence in which he
admitted being employed but denied that any fiduciary duties arising as a result
of the
employment relationship continued after the termination of the
employment. He further denied that the two Documents, which did contain
post-employment restraints, were enforceable on the basis that they had not
been filed with and approved by the Office of the Employment
Advocate.
38. So
far as the confidential information is concerned, Mr Farmer denied that he had
misused any confidential information and denied
that any information he had used
was subject to a post-employment restraint of the kind that was claimed by
Financial Integrity.
39. There were, then, two principal issues that were
joined between the parties:
1. whether the two Documents, being the two
Australian Workplace Agreements purporting to be employment contracts between
the parties,
were valid and enforceable; and
2. whether following the
termination of his employment with Financial Integrity, Mr Farmer was
subject to a restraint with respect
to confidential information.
40. I shall
deal with each of these in turn.
The employment agreement – the two
Documents
41. As I have set out above, each of the two Documents was entitled
“Australian Workplace Agreement” and was referred
to as an
“Agreement under s 170VF Australian Workplace Relations Act [sic] (Cth)
1996”. Clauses 3 and 4 in them are relevant and I set them out
below:
3 Title
3.1 This Australian Workplace Agreement (“Agreement”) will be known as the ‘Financial Integrity Group Agreement’.
4.1 This Agreement will come into effect on the date that you are offered employment under this Agreement with us subject to its certification by the Office of the Employment Advocate (OEA).
4.2 This Agreement shall remain in force unless:
(a) your employment is terminated in accordance with the provisions of this Agreement by either party; or
(b) this Agreement is replaced with another Australian Workplace Agreement (AWA).
4.3 The provisions of this Agreement that address confidential information, intellectual property and post employment restraint will continue to be enforceable at common law regardless of the termination of your employment or of this Agreement.
42. Further, cl 5.1(a) in them refers to an intention to achieve the objectives
in relation to discrimination set out in the Workplace Relations Act 1996
(Cth).
43. The Workplace Relations Act 1996 (Cth) sets out relevant
provisions in relation to such agreements. In the first place, s 170VF
provides:
(1) An employer and employee may make a written agreement, called an Australian workplace agreement, that deals with matters pertaining to the relationship between an employer and an employee;
(2) The AWA may be made before commencement of the employment.
44. Section 170VA defines an AWA (which is defined in s 4 to mean an Australian
Workplace Agreement) to mean also a proposed Australian Workplace Agreement.
Thus, the fact that a document
which may become an Australian Workplace
Agreement has not been signed by both parties or has not approved by the Office
of the Employment
Advocate does not render it beyond the provisions of Part VID,
being ss 170VA to 170 WL.
45. I am, therefore, satisfied that the two
Documents are Australian Workplace Agreements for the purposes of the
Act.
46. The provisions of the Workplace Relations Act 1996 (Cth) became very
important to determine whether the two Documents have any effect. Section 170VC
of that Act is important. It
provides:
An AWA is of no effect unless at least one of the following applies at the time when the AWA is filed:
(a) the employer is a constitutional corporation;
(b) the employer is the Commonwealth;
(c) the employee’s primary workplace is in a Territory;
(d) the employer is a waterside employer, the employer is a waterside worker and the employee’s employment is in connection constitutional trade or commerce;
(e) the employee is a maritime employee and the employee’s employment is in connection with the constitutional trade or commerce;
(f) the employee is a flight crew officer and the employee’s employment is in connection with constitutional trade or commerce.
The two Documents clearly meet criterion (c) and possibly (a), Financial
Integrity probably being a trading or financial corporation
formed within the
Commonwealth.
47. Finally, and for these proceedings most importantly, s
170VD provides:
An AWA or ancillary document has effect as provided by this Part and not otherwise. In particular
(a) an AWA for a new employee has no effect before a filing receipt is issued for the AWA; and
(b) an AWA for an existing employee has no effect before an approval notice is issued for the AWA.
48. As noted above (at [29] and [31]), it was agreed between the parties that
neither an approval notice nor a filing receipt had
been issued in respect of
either of the documents referred to.
49. As a result, the two Documents must,
in my view, be of no effect. That is to say, as a matter of statute law, they
can be given
no effect.
50. I am reinforced in my view by the decision of a
specialist tribunal, the South Australian Industrial Relations Court in
Yurong
Holdings Pty Ltd v Renella [2005] SAIRC 60 where his McCusker J dismissed
an appeal from Industrial Magistrate Ardlie (Renella v Yurong Holdings Pty Ltd
[2005] SAIRC 26) who had held that an Australian Workplace Agreement was of no
effect where there was no filing receipt, even though it was claimed
that the
receipt may have gone astray in the post and where the employer had lodged and
had received approval for 20 other Australian
Workplace Agreements. His Honour
upheld that finding, even though, he noted, the proceedings were governed by s
154 of the Industrial
and Employee Relations Act 1994 (SA) which
provides:
154.(1) In exercising its jurisdiction, the Court or the Commission:
(a) is governed in matters of procedure and substance by equity, good conscience, and the substantial merits of the case, without regard to technicalities, legal forms or the practice of courts; and
(b) is not bound by evidentiary rules and practices but may, subject to subsection (2), inform itself as it thinks appropriate.
(2) the Court and the Commission must observe the rules of natural justice.
51. Similarly, but to slightly different effect, is McLennan v Surveillance
Australia Pty Ltd [2005] FCAFC 46; (2005) 142 FCR 105, where the Full Court of the Federal Court
of Australia held that an ancillary document, which purported to make an
agreement collateral
to an approved Australian Workplace Agreement, but which
had not itself been approved as a variation, was void. The Court’s
analysis of the statutory effect on the document there under consideration (at
[48] to [56]) is apposite here and I gratefully rely
on it. While in a slightly
different context, it confirms the clear intention of the Act to ensure that
such agreements are only
valid and effective if the appropriate procedures are
followed. That did not happen in this case and renders the two Documents
unenforceable
and, in the words of the statute, “of no
effect”.
52. That does not mean that there was no employment
relationship between Mr Farmer and Financial Integrity. There clearly was.
Indeed,
that would be so independently even if the two Documents had been valid,
enforceable and effective Australian Workplace Agreements.
53. As was said in
McLennan v Surveillance Australia Pty Ltd by Black CJ and Moore J (at
123):
In any event, it might be expected that an AWA will not deal with all aspects of the employment relationship and leave some room for the operation of terms implied by the common law as could have been the case in relation to comprehensive industry awards made under the Act in an earlier form: see the observations of Wilson J in Ansett Transport Industries (Operations) Pty Ltd v Wardley [1980] HCA 8; (1980) 142 CLR 237 at 287 but compare the observations of Mason, Brennan and Deane JJ in Metal Trades Industry Association v Amalgamated Metal Workers’ and Shipwrights’ Union [1983] HCA 28; (1983) 152 CLR 632 at 649. That said, the parties may endeavour to create an entire employment agreement and exclude terms which might otherwise have been implied by law: see the observations of McHugh and Gummow JJ in Byrne v Australian Airlines Ltd [1995] HCA 24; (1995) 185 CLR 410 at 450. On one view that is what the respondent and the appellant sought to achieve in the present matter with cl 1.4.2 set out at [13].
The second uncertainty concerning the operation of Pt VID is the relationship between an AWA and the contract of employment. A related question is the effect of the statutory scheme in Pt VID on the capacity of the parties to an AWA to reach agreement, with immediate binding and enforceable legal effect, on matters relating to the employment relationship. Part VID does not appear to address, at least explicitly, the effect of an AWA on contractual arrangements between the parties to an AWA. Obviously if the contractual terms are embodied in an AWA, this issue does not arise. If, however, the agreement which becomes the AWA addresses only some aspects of the employment relationship, questions may arise about its effect on other aspects of the employment relationship dealt with, either expressly or impliedly (as a matter of fact or law), by the contract of employment and, in particular, contractual terms agreed to after the AWA came into force.
54. Their Honours further commented (at 124):
Accordingly, if Div 6 is silent on the effect of an AWA on the common law (and, in particular, contractual provisions made and enforceable under the common law) it can be assumed an AWA does not derogate from contractual terms concerning rights and obligations not dealt with by the AWA whether agreed to before the AWA was entered into or after.
55. The complexity of these issues has been commented on in a valuable article
by Fetter J and Mitchell R, “The Legal
Complexity of Workplace
Regulation and Its Impact upon Functional Flexibility in Australian
Workplaces” (2004) 17 Australian
Journal of Labour Law 276. The authors
comment (at 284) on the interaction between the contract of employment and
regulation external
to that contract. Their research showed that, of the 500
Australian Workplace Agreements they surveyed, “almost all incorporated
or
otherwise recognised some other instrument or regulation” (at 289). These
included written terms, letters of offer and
company policies, even when not
directly referred to in the Australian Workplace Agreement itself.
56. As
can be seen from these extracts, the relationship between an employment contract
and an Australian Workplace Agreement is not
entirely clear. In Creighton B and
Stewart A, Labour Law (4th ed, The Federation Press, 2005), the authors
note that the existence
of an employment relationship is a prerequisite to the
creation of an Australian Workplace Agreement and is, therefore, presupposed
(at
249, 315-6). This is consistent with other authority, where, in Hogan v
Employment National (Administration) Pty Ltd (2002) 119 IR 59 (at 116-7), it was
held that the terms of the Australian Workplace Agreement had apparently not
become part of the terms of the employment
contract between the
parties.
57. On the other hand, in Hastings v J H Corporate Security Services
Pty Ltd [2000] SASC 216, Debelle J noted without comment (at [4]) that “it
was common ground that, when employed by IRW, the plaintiff’s contract
of
employment was an Australian workplace agreement.” His Honour was,
however, there not asked to consider that issue.
58. Mr Purnell SC submitted
that, while the two Documents could have no effect in accordance with the
legislation, there was an employment
contract and the terms of the employment
agreement were to be found in the two Documents. That might have some validity
were the
provisions of the Workplace Relations Act 1996 (Cth) merely to the
effect that the two Documents were given additional, special or separate force
or effect when approved by the
Office of the Employment Advocate. That is,
however, not the position; the two Documents have “no effect”
before the
conditions in s 170VD are met. In my view, that means I cannot look
at the two Documents for any purpose, for to do so would, contrary
to the Act,
give an effect to them.
59. Employment contracts are often created in less
than perfect circumstances and the courts have not been slow to recognise them
even where they and their terms are to be determined from a complex of
conversations and conduct. Thus, for example, the courts
will identify a
contract notwithstanding difficulties in analysing the transaction in terms of
offer and acceptance. See New Zealand
Shipping Co
Ltd v AM Satterthwaite & Co Ltd [1974] UKPC 1; [1975] AC 154 (at 167).
See also per McHugh JA (at 11,117-18) (Hope and Mahoney JJA concurring) in
Integrated Computer Services Pty Ltd v Digital
Equipment Corp (Aust) Pty
Ltd (1988) 5 BPR 11,110. These principles apply to employment contracts:
Damevski v Giudice & Ors (2003) 133 FCR 438 (at 447, 453-5).
60. I
do not have enough information to identify the terms of the employment agreement
between Mr Farmer and Financial Integrity,
but can say, for example, that
the rates of pay would likely be discernible from the pay actually received and
the work required
from the work actually done. In addition, those common law
terms implied into every employment contract, such as fidelity to one’s
employer, would be part of the agreement. There would, it seems to me, be no
real legal difficulty, though perhaps some factual
challenges, in identifying
the terms of the employment agreement between Financial Integrity and Mr Farmer
without relying on the
Australian Workplace Agreements.
61. It is clear,
however, that the terms of the employment relationship could not be determined
by any reference to the two Documents.
62. Insofar as, therefore, there were
special terms to be found in those Australian Workplace Agreements but which
were neither implied
by law nor identifiable from conversation or conduct,
separate from discussion about or negotiations towards the making or execution
of the two Documents, these cannot be included in the employment agreement for
that would give an effect to the two Documents. The
terms would have to be
found quite independently. In my view, when the statute says “no
effect”, it means just that,
no effect.
63. Accordingly, I find that
the two Documents, being Australian Workplace Agreements, were of no effect
because of s 170VD of the
Workplace Relations Act 1996 (Cth) and that, as a
result, Financial Integrity cannot rely on them or their terms for any purposes
in these proceedings.
The employment agreement – implied terms and
equitable obligations
64. Financial Integrity submitted additionally that if
I found, as I have, that the two Documents were of no effect and Financial
Integrity could not rely on them, then I should find that the terms of the
employment agreement between Financial Integrity and Mr
Farmer included an
implied term to the same effect as cll 29 and 31 in the two Documents. Of
course, on my finding, I cannot have
any reference to those clauses for that
purpose.
65. Mr Purnell SC submitted that equity implied such terms into
employment contracts. It is not necessary for me to consider every
term implied
into an employment contract. The Statement of Claim relates only to certain
terms. It is appropriate to set out the
claims made in it. They are as
follows:
3.a. By reason of the employment relationship there was a fiduciary relationship between the plaintiff and the first defendant at the time of the said employment relationship and continuing after termination of that said relationship.
3.b. Pursuant to the said fiduciary relationship the first defendant owed the plaintiff fiduciary duties.
3.b.1. To at all time [sic] act in the best interests of the plaintiff.
3.b.2. Not to prefer the interest [sic] of the first defendant to the interests of the plaintiff.
3.b.3. Not to breach the said fiduciary duties by taking away clients of the plaintiff and/or by using the plaintiff’s confidential information and/or consulting with or advising customers or clients of the plaintiff and/or providing services to the customers or clients of the plaintiff and/or engaging in any business with the customers or clients of the plaintiff and/or by attempts to do any of the things mentioned in this sub-paragraph.
66. As can be seen, these terms are said to be implied not by virtue of the two
Documents, but by virtue of the relationship itself;
that is, they are said to
be implied terms or as equitable obligations imposed at law.
67. The
confidential information referred to in par 3.b.3 was then referred to in
further paragraphs as follows:
68. The following may be noted about these provisions:
(a) Paragraph 4 clearly refers to the two Documents which I have held to be of no effect. The paragraph, however, refers to them as “employment contracts”, without the first letters capitalised. This distinguishes them probably from the reference in par 3.a to the “employment relationship” but presumably refers to the same documents mentioned as the “Employment Contract” (though the first letters are capitalised, as one would expect if it were a defined term) in par 8. Whether this is the “contract of employment” referred to in par 7 is unclear.
(b) There is no allegation that the information or other material referred to in par 5 is confidential or a trade secret.
(c) Paragraph 7, by using the term “contract of employment” is arguably referring to the common law contract, though it may simply be a carelessness of drafting and actually referring back to par 4. Nevertheless, it can be readily accepted, as I do, that the common law agreement would have permitted Mr Farmer to have access to such material.
(d) Paragraph 8 can only realistically refer to the two Documents (presumably the one current at any relevant point of time) referred to in par 4. It cannot, therefore, be operative. Some particulars of par 8 were provided by letter subsequently, listing five persons said to be clients of Financial Integrity at the time Mr Farmer was employed and whose business Mr Farmer sought to have transferred to Bravium.
69. The relevant paragraphs of the Statement of Claim continues as follows:
10.a. Sometime after the first defendant commenced employment with the second defendant the first defendant breached the fiduciary relationship and the fiduciary duties owed by the first defendant to the plaintiff by directly or indirectly approaching clients of the plaintiff by providing investment and/or insurance and/or financial advice and services and/or soliciting clients of the plaintiff.
70. The following is to be noted about these paragraphs:
(e) While par 10 relies principally on the two Documents, which I have found have no effect, it could arguably be apt to raise an issue were I to find that an obligation of confidence in relation to the relevant material was imposed by equity (or implied into the employment agreement) and continued following the termination of the agreement. The paragraph is, however, devoid of particulars which are necessary to determine the allegation.
(f) There are no particulars provided, either in the Statement of Claim or independently (and none were apparently sought) of the allegations in par 10.a, though I am satisfied I can use the particulars provided to par 8 as to the clients approached.
71. The issue then is as to whether, absent reliance on the two Documents
pleaded in par 4, there is, at law, a cause of action
as pleaded by
reference to the common law contract.
72. The position has been most
helpfully described by Hodgson JA (with whom McColl JA agreed) in Del
Casale and Ors v Artedomus
(Aust) Pty Ltd (2007) 73 IPR 326 where (at
333-4) his Honour said:
73. To the same effect was what fell from Campbell JA (with whom McColl JA also agreed) when his Honour said (at 341-2):
... shall honestly and faithfully serve his master; that he shall not abuse his confidence in matters pertaining to his service, and that he shall, by all reasonable means in his power, protect his master’s interests in respect to matters confided to him in the course of his service: Robb v Green [1895] 2 QB 1 at 10-11.
74. It is important in this area of the law to distinguish between the various levels of confidentiality of knowledge and restraint. The seminal analysis is that of Goulding J in Faccenda Chicken Ltd v Fowler & Ors [1985] 1 All ER 724 where (at 731-2) his Honour described three categories of information as follows:
First there is information which, because of its trivial character or its easy accessibility from public sources of information, cannot be regarded by reasonable persons or by the law as confidential at all. The servant is at liberty to impart it during his service or afterwards to anyone he pleases, even his master’s competitor. An example might be a published patent specification well known to people in the industry concerned. This class of information, however, must not be extended too readily ...
Second, there is information which the servant must treat as confidential, either because he is expressly told it is confidential, or because from its character it obviously is so, but which once learned necessarily remains in the servant’s head and becomes part of his own skill and knowledge applied in the course of his master’s business. So long as the employment continues, he cannot otherwise use or disclose such information without infidelity and therefore breach of contract. But when he is no longer in the same service, the law allows him to use his full skill and knowledge for his own benefit in competition with his former master; and ... there seems to be no established distinction between the use of such information where its possessor trades as a principal, and where he enters the employment of a new master, even though the latter case involves disclosure and not mere personal use of the information. If an employer wants to protect information of this kind, he can do so by an express stipulation restraining the servant from competing with him (within reasonable limits of time and space) after the termination of his employment ...
Third, however, there are, to my mind, specific trade secrets so confidential that, even though they may necessarily have been learned by heart and even though the servant may have left the service, they cannot lawfully be used for anyone’s benefit but the master’s”.
75. The second category is sometimes described as “know-how”:
Stevenson Jordan and Harrison Ltd v MacDonald and Evans
(1952) 69 RPC 10 (at
12); O’Brien & Ors v Komesaroff [1982] HCA 33; (1982) 150 CLR 310 (at 328).
The use of know-how can be the subject of an express contractual restraint
post-employment and is, if confidential in
nature, subject to an implied
restraint during the period of employment, but otherwise not subject to any
restraint at all.
76. Here, the pleading alleges that the breach was
occasioned by Mr Farmer “directly or indirectly approaching clients of
[Financial
Integrity] by providing investment and/or insurance and/or financial
advice and services and/or soliciting clients of [Financial
Integrity]”.
77. The problem with this allegation is that none of the
allegations of breach refers to information that would be restricted in use
or
disclosure after the termination of employment without much more, either by
description of the kind of material it was, or the
circumstances of its
disclosure to Mr Farmer in the absence of an express contractual
restraint.
78. As to the details of the clients, the passages I have cited
from Del Casale & Ors v Artedonus (Aust) Pty Ltd are clear.
As was
said by Tipping J in Peninsular Real Estate Ltd v Harris [1992] 2 NZLR 216 (at
220):
In my judgment the essential point is this. An ex-employee who, without a list or deliberate memorisation, happens to recall that somebody is a customer or client of his former employer is ordinarily allowed to approach that person to do business in competition with his former employer. What the ex-employee may not do is deliberately to copy, take away or memorise lists of customers or the like to facilitate his competition with his former employer. To that extent, with respect, I do not entirely agree ... that the difficulty is not in relation to the ex-employee’s knowledge of the names and addresses of the former employer’s customers.
The difficulty really stems from how the ex-employee retains or is able to call up his knowledge of the former employer’s customers. Genuine unaided memory is one thing; copying either on paper or in the mind lists or other customer data is quite another. Obviously there may in the individual case be difficulties of proof but that in my judgment is the fundamental distinction.
79. In this case, there is no allegation in the pleading of a list being
prepared or taken surreptitiously by Mr Farmer. That
would justify the
claim: NP Generations Pty Ltd v Feneley [2001] SASC 185; (2001) 80 SASR 151 (at
155).
80. Indeed, Debelle J in that case set out (at 156) the following
principles which his Honour noted are well settled:
81. Here there is no allegation of improper appropriation of a customer list, a
necessary ingredient in showing the actionable use
of the material. This is
perhaps reinforced by the relatively small list of five clients particularised
by Financial Integrity as
the clients approached allegedly in breach of Mr
Farmer’s contractual (but invalid) or equitable obligations.
82. Much
of the evidence of Financial Integrity seems to suggest no wholesale canvassing
of clients such as may be the consequence
of a stolen list of clients. For
example, in the affidavit of Mr Walsh appears the following paragraphs:
83. There is indeed an implication in this evidence, if not more, that the
clients approached Mr Farmer, possibly when they
knew he had left the
employ of Financial Integrity.
84. Similarly, in the affidavit of Mr Miller,
after Mr Farmer initially lied about a client’s approach, apparently on
her instructions,
the following appears:
85. The affidavit of Mr Downey was to similar effect, if somewhat less culpable of Mr Farmer. He deposed:
...
86. The affidavit of Mr Hedlund, however, contained some more troubling material. He deposed:
87. This evidence is quite slim. It is not clear how Mr Hedlund knows that the
information was retained; there is no information
as to how it was collected
and in what circumstances; it is not clear whether the clients of Financial
Integrity who were the subject
of the particulars of those canvassed and
transferred to Bravium were only clients serviced by Mr Farmer as an employee of
Financial
Integrity or were contacted because of the list; there is no
suggestion that if Mr Farmer knew the list was on the laptop he took
steps to
secure the allegedly confidential information when he knew he was leaving
Financial Integrity.
88. Nevertheless, there is some evidence to suggest that
there may be a breach of a duty of confidence as suggested by the cases I
have
cited. This does negative the assertion in the written submissions of Mr I
M Neil SC, who appeared for Mr Farmer
and Bravium, that:
In fact, there is nothing to support any suggestion that the first defendant [Mr Farmer] has done anything more than make use of any unaided recollection that he might have of the names and addresses of his former employer’s customers ...
89. As I have noted above, a summary judgment application is not the occasion
for resolution of a dispute as to facts. In the light
of this material, despite
its slim probative value at this stage, there is sufficient evidence to leave
alive a residue of the claim
by Financial Integrity against Mr Farmer on this
ground.
90. As to the balance of the pleaded allegation, the provision of
investment, insurance or financial advice appears, without more,
to be centrally
within the notion of know-how for a financial adviser. Without more pleading of
a very particular kind, there is
no apparent cause of action here.
91. The
evidence does not suggest any information of a confidential kind that has been
used by Mr Farmer or Bravium. On this ground,
there is no reasonable cause of
action so far pleaded.
The claim against Bravium
92. Bravium appears
barely in the pleadings. It is mentioned in four paragraphs of the Amended
Statement of Claim. There is no pleading
as to its corporate status, an
essential part of any cause of action: Moldex Ltd v Recon Pty Ltd [1948]
VLR 59 (at 60).
93. There is no allegation in the Amended
Statement of Claim of any basis on which Bravium might be liable to Financial
Integrity.
Nothing was suggested in argument.
94. On the other hand, as
Cross J said in Printers & Finishers Ltd v Holloway & Ors (No 2)
[1964] 3 All ER 731 (at 737):
... the case of Prince Albert v Strange [1849] EngR 669; (1849) 1 Mac & G 25 shows that an injunction may be granted against someone who has acquired – or may acquire – information to which he was not entitled without notice of any breach of duty on the part of the men through whom he obtained it.
95. This was refined by Megarry VC where (at 361) in Malone v Metropolitan Police Commissioner (No 2) [1979] 1 Ch 344, his Lordship explained the principle thus (at 361):
If A makes a confidential communication to B, then A may not only restrain B from divulging or using the confidence, but also may restrain C from divulging or using it if C has acquired it from B, even if he acquired it without notice of any impropriety ... In such cases it seems plain that however innocent the acquisition of the knowledge, what will be restrained is the use or disclosure of it after notice of the impropriety.
96. The pleading does not squarely raise the issue and would need amendment, but there is some evidence to suggest that Bravium has acquired knowledge of the confidential information, if that is what it is, as Mr Hedlund deposed that:
(1) Mr Farmer told Mr Hedlund that “Ian and I might go out and set up our own business”.
(2) Later, around 11 April 2007, Mr Farmer told Mr Hedlund, “I am starting my own financial planning business”.
(d) In the same conversation, Mr Farmer said the name of his business would be Bravium.
97. Further, a company search of the records held at the Australian Securities
and Investment Commission shows that Mr Farmer is
the only director of Bravium,
which was registered on 8 March 2007, and that the principal place of business
is the residential address
of Mr Farmer.
Remedies
98. One matter that may
need attention but which was not subject to argument and on which I cannot,
therefore, make a finding, is
the question of the remedy sought by Financial
Integrity.
99. Ordinarily, the remedy for breach of confidence is an
injunction. Damages at common law are not available.
100. Until Lord
Cairns’ Act (Chancery Amendment Act) 1858 (UK) (21 & 22 Vic c 27)
courts of equity were unable to award
damages. That Act changed the position
and permitted courts to award damages where the court had power to grant an
injunction or
to order specific performance.
101. Every State and Territory
in Australia enacted provisions which were similar to Lord Cairns’ Act,
and gave superior courts
the power to award equitable damages. See
Dal Pont GE, Chalmers DRC, Equity and Trusts in Australia (3rd ed, Lawbook
Co, 2004)
(p 898). Queensland repealed the provision but it was held to have
nevertheless survived: Barbagallo & Anor v J & F Catelan
Pty Ltd &
Ors [1986] 1 Qd R 245.
102. In the Territory, the enactment was through the
adoption of s 9 of the Equity Act 1901 (NSW) though s 11 of the Seat of
Government
Supreme Court Act 1933 (Cth) which provides:
(a) the same original jurisdiction, both civil and criminal, as immediately before the first day of January, One thousand nine hundred and eleven, the Supreme Court of the State of New South Wales had in relation to that State; and
(b) such jurisdiction, both civil and criminal, and whether original or otherwise, as is from time to time vested in the Supreme Court by Ordinances made by the Governor-General; and
(c) jurisdiction, with such exceptions and subject to such conditions as are provided by Ordinance, to hear and determine appeals from all judgments, convictions, orders, and sentences of inferior Courts having jurisdiction in the Territory.
103. When the Supreme Court was transferred to the responsibility of the Territory (Australian Capital Territory Supreme Court (Transfer) Act 1992 (Cth) (the Transfer Act)) this Act became an enactment (Australian Capital Territory Self-Government Act 1988 (Cth) s 34) and became entitled Supreme Court Act 1933 (ACT). The Transfer Act repealed and renumbered this section to provide:
20 Jurisdiction and powers of Supreme Court
(1) The court has the following jurisdiction:
(a) all original and appellate jurisdiction that is necessary to administer justice in the Territory;
(b) jurisdiction conferred by a Commonwealth Act or a law of the Territory.
(2) Unless it is required to do so by or under a Commonwealth Act or a law of the Territory, the court is not bound to exercise its powers if it has concurrent jurisdiction with another court or tribunal.
104. The reason for the change was a little opaque. The Explanatory Memorandum to the Transfer Act, as so often occurs, was hardly informative. It stated (by reference to the section prior to it being renumbered, but with the same content):
105. This repeal may have inadvertently repealed the jurisdiction of the Court
in respect of the jurisdiction given under Lord Cairns
Act. A repeal of the
relevant provisions in Queensland did not repeal the jurisdiction because it was
accompanied by a proviso that
the repeal should not affect “any
jurisdiction or principle or rule of law or equity – established by ... by
or under”
any of the repealed enactments: Barbagallo & Anor v J &
F Catelan Pty Ltd & Ors (at 250-1). See to the same effect
Leeds Industrial
Co-Operative Society Ltd v Slack [1924] AC 851 (at 861-2). No such proviso was
included in the Transfer Act.
106. It may be that a broad and expansive view
of s 20 of the Supreme Court Act 1933 (ACT) would somehow give jurisdiction to
award equitable damages despite the repeal of the empowering provisions. This
was an approach
perhaps taken in Kelly v Apps [2000] FCA 687; (2000) 98 FCR 101, though I
and others have criticised that decision: Travini v Starczewski [2009]
ACTSC 123 (at [66]).
107. In this context, I note that other jurisdictions
have not relied on grants of general jurisdiction to ensure that their Supreme
Courts have power under Lord Cairns’ Act (or its successors) to award
equitable damages. Thus, s 23 of the Supreme Court Act 1970 (NSW) and
s 85(1) of the Constitution Act 1975 (Vic) are in relevantly identical
terms to s 20 of the Supreme Court Act 1933 (ACT) but both legislatures have
included specific provisions retaining the Lord Cairns’ Act provision: s
68 Supreme Court Act 1970 (NSW) and s 38 Supreme Court Act 1986 (Vic). These
would not be necessary if the wide general jurisdiction provision was
sufficient. It seems to me there is real doubt
about whether s 20 of the
Supreme Court Act 1933 (ACT) is sufficient to grant this
jurisdiction.
108. The final avenue of consideration I followed was to
ascertain whether s 9 of the Equity Act 1901 (NSW) might still be in force
and
supply what might be a lacuna. This Act was, however, repealed by the New South
Wales Acts Application Ordinance 1985 (Cth)
s 3. That Ordinance, however, was
disallowed as a result of the effluxion of time following the tabling of a
disallowance motion.
See Senate Standing Committee on Regulations and
Ordinances, 76th Report, Report Upon a Certain Ordinance of the Australian
Capital
Territory Disallowed by Effluxion of Time (Commonwealth Government
Printer, 1986) (Parliamentary Paper 507 of 1985). The Committee
concluded that
despite the disallowance, it was quite likely that the repealed Acts had not
been revived and were repealed.
109. As there has been no substantive
argument on this issue, I do not make a finding, but attention needs to be given
to this issue
if the matter proceeds to a hearing.
Conclusion
110. In the
circumstances, I am not prepared to enter summary judgment against Financial
Integrity. Though the material before me
does not disclose a strong case
against the defendants, it is just sufficient to permit it to go to trial, but
only on the basis
of any implied contractual term of confidence or equitable
duty of confidence, which the alleged taking of the list by Mr Farmer,
if
proved, might breach.
111. The pleadings, so far as they rely on the two
Documents, either directly or indirectly, must be struck out and I shall do
so.
112. In addition, pars 3.b, 3.b.1, 3.b.2 and 3.b.3 are embarrassing in
that they describe a fiduciary relationship that subsists during
the currency of
employment but that is not relevant to these proceedings. Insofar as they might
be implied, because of paragraph
3.a, to subsist beyond the termination of the
employment relationship, I find that they do not represent the law or, in the
case
of par 3.b.3, are too broadly stated.
113. Although Mr Purnell SC
expressly withdrew his application for leave to amend, it would be unjust not to
permit Financial Integrity
to amend, but by application.
114. I am satisfied
that, after striking out the paragraphs which I propose to do, the balance of
the Amended Statement of Claim does
not then disclose a complete cause of
action, though this could arguably be rectified by amendment. Thus, by not
striking out certain
paragraphs, I do not intend to be taken to imply that the
remaining provisions may not need amendment or at least
supplementation.
115. No amendment, however, will be allowed that makes any
reference to the two Documents.
116. As to costs, while Mr Farmer has not
been successful in securing summary judgment, he has achieved success on a
substantial part
of the claim by Financial Integrity and on the issue which was
by far the larger part of the hearing. I shall hear the parties on
costs but my
inclination, though not concluded view, is that Financial Integrity should pay
the costs of Mr Farmer and Bravium.
I certify that the preceding one-hundred and sixteen (116) numbered paragraphs are a true copy of the Reasons for Judgment herein of his Honour, Justice Refshauge.
Associate:
Date: 27 October 2009
Counsel for the plaintiff: Mr F J Purnell SC
Solicitor for the
plaintiff: Ken Cush & Associates
Counsel for the defendant: Mr I M Neil
SC, Mr L Ferdandez
Solicitor for the
defendant: Williams Love & Nicol Lawyers
Date of hearing: 20 March
2008
Date of judgment: 27 October 2009
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URL: http://www.austlii.edu.au/au/cases/act/ACTSC/2009/143.html