Del Casale & Ors. v. Artedomus (Aust) Pty. Limited [2007] NSWCA 172
Background facts
The first and second appellants were directors and employees of the respondent company, the sole importer of modica stone marketed as “Isernia”. As part of the termination of employment, the appellants agreed to keep confidential any “commercially sensitive information”, which was thought to include information as to the source of Isernia. However, the appellants set up a a company called Stone Arc (the third appellant) and used their knowledge to import and sell modica stone. The respondent claimed against the appellants for breach of confidence, breach of the agreement and violation of section 183 of the Corporations Act 2001 (Cth).
Decision
The primary judge found that the appellants had breached confidence and ordered a permanent injunction to restrain the appellants from using the confidential information. The primary judge also ordered an account of profits.
The NSW Court of Appeal granted leave to appeal and allowed the appeal in part.
Hodgson JA (with McColl JA agreeing) found that:
- once employment ceases, in the absence of an express contract dealing with thematter, the issue of confidentiality is generally best dealt with under the general equitable principles and not through implied terms in the employment contract.
- if the confidential information can be readily distinguished from an employee’s general know-how and is not ascertainable by enquiry or experiment, then it is more likely to be treated as confidential.
- Here, it was difficult to separate out the appellants’ general know-how in relation to the stone from the information sought to be protected, and in the absence of contractual constraint this information could be used by the appellants.
In obiter, their Honours stated that a distinction may be drawn between ex-employees disclosing information for others to use and actually using it themselves, so that in certain circumstances, equitable relief could be granted against the former but not the latter. In any event, the permanent injunctions were excessive.
However, their Honours found that the conduct of the first appellant amounted to competition with the respondent, and thus he breached the Agreement.
Link to New South Wales Supreme Court of Appeal decision