Eracom Technologies Australia Pty Ltd v Wibowo & Anor [2005] QSC 140

SUPREME COURT OF QUEENSLAND CITATION: Eracom Technologies Australia Pty Ltd v Wibowo & Anor [2005] QSC 140 PARTIES: ERACOM TECHNOLOGIES AUSTRALIA PTY LTD (ACN 001 745 375) (plaintiff) v HARTONO WIBOWO (defendant) ALTISSE PTY LTD (ACN 104 837 532) FILE NO/S: BS 10438 of 2003 DIVISION: Trial Division PROCEEDING: Application ORIGINATING COURT: Supreme Court, Brisbane DELIVERED ON: 25 May 2005 DELIVERED AT: Brisbane HEARING DATE: 11 May 2005 JUDGE: Moynihan J ORDER: 1. Direct the defendants to disclose the schedules to the Master Distributor Agreement within seven days of this order. If the parties cannot agree undertakings on terms of an order to appropriately deal with confidential issues the issue can be dealt with by the court. 2. The application is adjourned to a date to be fixed. 3. Liberty to apply CATCHWORDS: PROCEDURE – DISCOVERY AND INTERROGATORIES – DISCOVERY AND INSPECTION OF DOCUMENTS – DISCOVERY OF DOCUMENTS – USE OF DOCUMENTS – where application brought for further disclosure – where defendants resist disclosure. Uniform Civil Procedure Rules 1999 (Qld) Acts Interpretation Act 1954 (Qld) Robson v Rob Engineering Pty Ltd [1997] 2 Qd R 102 -- 1 of 7 -- 2 COUNSEL: Ms S Heath (sol) for the plaintiff Mr J Faulkner for the first and second defendant SOLICITORS: Tucker & Cowen solicitors for the plaintiff Ledger Commercial and Property Lawyers for the first and second defendants [1] MOYNIHAN J: This is an application for further disclosure. The action is one in which the plaintiff, a developer and supplier of IT security products, sues a former employee, the first defendant, who is presently employed by the second defendant. [2] The plaintiff’s claim is founded on allegations of breach of the first defendant’s contractual and fiduciary duties to the plaintiff and the second defendant’s breach of a non-disclosure agreement with the plaintiff. The second defendant is alleged to be liable on the basis it was a party to or participated in the first defendant’s breach of fiduciary duty. [3] On 8 April 2005 the plaintiff applied for further disclosure before White J. Her Honour made a number of orders for disclosure including disclosure of a “Master Distributor Agreement” between the second defendant and nCipher Corporation Limited a UK corporation and a competitor of the plaintiff’s. [4] The purpose of the Master Distribution Agreement includes for the second defendant to “advance the business of nCipher in … the ‘territory’”. The “territory” is defined to mean the geographical area specified in Schedule 1 to the agreement. [5] At the hearing it emerged that there were a number of schedules to the agreement, the plaintiff was previously not aware of them. It was therefore decided that the plaintiff be given the opportunity to review its position and seek further disclosure in respect of the schedules if it saw fit to do so. [6] The plaintiff determined to seek disclosure of the schedules. On 18 April 2005 it wrote pursuant to UCPR 444 seeking it. As a consequence of a response of 21 April 2005 it wrote a revised letter dated 22 April 2005. [7] The defendants resist disclosure of the schedules on the basis that they are confidential and that there is “insufficient pleading to justify an order breaching that confidence”. At the hearing before me counsel for the defendants acknowledged appropriate undertakings or provisions of an order for disclosure could protect the confidentiality of the information in the schedules. -- 2 of 7 -- 3 [8] Uniform Civil Procedure Rule 211 imposes a duty to disclose documents in the possession or under control of a party which are “directly relevant” to an allegation in the pleading or to a matter in issue in a proceeding. A document is directly relevant when it tends to prove or disprove an allegation in issue in the dispute Robson v Rob Engineering Pty Ltd1 . [9] The case against the defendants is pleaded in terms of breach of express or implied contractual terms and breach of fiduciary duty. [10] It is pleaded that the first defendant’s employment contract provides inter alia for him to: “a) manage and expand (the Plaintiff’s) existing business relationships b) maximise sales of the Plaintiff’s products c) develop new business opportunities for the Plaintiff’s products d) engage in professional and ethical conduct e) maintenance of customer records on company database and sales reports” [11] It is then pleaded the first defendant breached implied contractual terms and fiduciary duties which are expressed in identical terms: “a) not act in conflict with the Plaintiff b) not prefer his own interests over those of the Plaintiff c) act at all times in good faith towards the Plaintiff d) devote himself fully to the business of the Plaintiff e) not improperly use his position to gain advantage for himself f) not cause detriment for the Plaintiff g) not use the resources of the Plaintiff for his own use and benefit h) not use the Confidential Information for his own use and benefit i) not to complete and/or carry out any acts to the detriment of the employer j) not to misuse confidential or other information belonging to the employer and k) not to misuse confidential or other information belonging to the plaintiff and obtained in the course of his employment with the Plaintiff, in order to cause detriment to the Plaintiff, and/or to have the effect of causing detriment to the employer l) not to derive profit from opportunity or knowledge acquired by him by reason of his employment with the employer 1 [1997] 2 Qd R 102 -- 3 of 7 -- 4 m) to carry out the duties of his employment in a proper and competent manner thereinafter collectively referred to as the “Fiduciary Duties”) [12] The plaintiff also relies on a non disclosure agreement with the first defendant. It is pleaded that: “9. It was an express term of the Non-Disclosure Agreement that the First Defendant would not a) divulge, distribute, disclose or disseminate in any way to anyone … any of the Confidential Information b) make, have made or use or sell for his own purposes or any other, any of the Confidential Information.” [13] Paragraph 10 of the statement of claim is: “10. In breach of the express terms of the Employment Contract and the Non Disclosure Agreement, the Implied Terms and the Fiduciary Duties, the First Defendant did without the consent and permission of the Plaintiff: a) act in conflict with the Plaintiff b) prefer his own interests over those of the Plaintiff c) not act at all times in good faith towards the Plaintiff d) fail to devote himself fully to the business of the Plaintiff e) improperly use his position to gain advantage for himself f) act in a way calculated or having the effect to cause detriment for the Plaintiff g) use the resources of the Plaintiff for his own use and benefit h) use the Confidential Information for his own use and benefit i) misused confidential or other information belonging to the Plaintiff which information was obtained in the course of employment with the Plaintiff for the First defendant’s own benefit and to the detriment of the Plaintiff.” Particulars are then provided. [14] The statement of claim continues: “11. In breach of the said duties the First Defendant has the derived profit from opportunity and knowledge obtained by reason of his employment with the Plaintiff. -- 4 of 7 -- 5 12. But for his employment with Plaintiff, the First Defendant:- a) would not have had the opportunity to obtain the said documents including the customer database; b) further, or alternatively, would not have had the opportunity to work with the clients of the Plaintiff and would not have known who they were; c) would not have knowledge of the operating systems and requirements of the clients of the Plaintiff. 13. But for the knowledge of the Plaintiff’ clients obtained from the above documents and/or the customer database and working for the Plaintiff, the Defendant could not have approached clients of the Plaintiff listed in the customer database and would not have known who they were; 14. But for his work with clients of the Plaintiff whilst in the Plaintiff’s employment the First Defendant would not have been able to induce clients of the Plaintiff to utilise his services. 15. By reason of the above matters the First Defendant has induced and/or attempted to induce customers of the Plaintiff to use:- a) the First Defendant’s services, and/or b) the services of Altisse Pty Ltd and/or other entities instead of those of the Plaintiff. (full particulars of which can only be supplied after disclosure has been effected)”. [15] The first defendant’s defence put paragraphs 9 and 10 substantially in issue and denies paragraphs 11 to 15. [16] The Master Distributor Agreement gives some insight to the content of the schedules. It should be noted that the agreement was executed while the first defendant was still employed by the plaintiff. [17] Schedule 1 apparently identifies the relevant geographical territory within which the second (and the first) defendants were to conduct business, together with sales forecasts and details of the funding to be provided by nCipher during the first 18 month term of the agreement. [18] The territory and sales information inferentially bears on negotiations, which took place, during the first defendant’s employment by the plaintiff, resulting in the first defendant leaving the plaintiff’s service and the second defendant’s entering into the Master Distributor Agreement. The first defendant controls and is a director of the second. [19] The identification of territories, particularly if they relate to those allocated by the plaintiff during his employment with the first defendant, is directly relevant to alleged breaches of his contractual and fiduciary duties. -- 5 of 7 -- 6 [20] The sales forecasts are relevant to the issues in dispute, particularly where the sales are related to the forecast and the benefit, financial or otherwise, obtained by the first defendant for those sales. [21] Schedules 2 and 3 apparently relate to purchase orders and nCipher terms and conditions for sale including obligations of and responsibilities on the part of nCipher. Schedule 4 is apparently a business plan submitted by the defendants to nCipher and agreed on by them and nCipher. [22] When the duties and breaches pleaded in the statement of claim are looked at it appears that information in these schedules is directly relevant to the issues arising on the pleadings. The schedules apparently contain information which may tend to support the plaintiff’s allegations of breach of duty. [23] The defendants complain that the rule 444 letters do not refer to specific paragraphs of the statement of claim to which the schedule is said to be relevant and of the absence of allegation as to how and on what basis any confidential information was used or in respect of areas or clients where there was alleged to be any conflict. [24] To the extent to which that is the case it would seem to be a consequence of the plaintiff not knowing what the schedules contain. When it does the defendants can seek particulars. On the material as it presently stands the schedules are directly relevant to the issues arising on the pleading. [25] The second unresolved disclosure issue is whether the respondents have discharged their obligation to disclose documents evidencing communications and methods of communication of any kind by the plaintiff’s clients or former clients and with nCipher. This arose as a consequence of White J’s order of 8 April 2002. [26] There is an affidavit by the solicitor for the defendants deposing that he had explained the defendant’s obligations of disclosure to the first defendant and following White J’s order of 8 April 2005 advised the first defendant to review disclosure. [27] On the hearing of the application before me the defendants filed by leave an affidavit by the first defendant on his own behalf and as a director of the second defendant authorised to swear on its behalf that:- “… all the documents and documents evidencing communications and methods of communication of any kind whatsoever with clients, former clients, the plaintiff in nCipher in mine and the second defendant’ possession and control which are relevant have been disclosed.” -- 6 of 7 -- 7 [28] Section 36 of the Acts Interpretation Act 1954 defines documents to include “paper or other material on which there is writing, marks, figures, symbols or perforations and:- “(c) any disc, tape or other article or any material from which sounds, images, writings or messages are capable of being produced or reproduced (with or without the aid of another article or device).” [29] The plaintiff’s affidavit filed by leave after advice, was presumably sworn with that definition in mind. In the event it was not the first defendant would be well advised to reconsider the position. [30] Those affidavits having been filed, I will not order the further disclosure sought under this head. [31] I therefore direct the defendants to disclose the schedules to the Master Distributor Agreement within seven days of this order. If the parties cannot agree undertakings on terms of an order to appropriately deal with confidential issues the issue can be dealt with by the court. [32] I will hear submissions on costs. [33] The application is adjourned to a date to be fixed. [34] Liberty to apply. -- 7 of 7 --