Macquarie Holdings (NSW) Pty Ltd v Maharaj [2019] NSWSC 811 (28 June 2019)

Last Updated: 1 July 2019

Supreme Court New South Wales

Case Name:	Macquarie Holdings (NSW) Pty Ltd v Maharaj
Medium Neutral Citation:	[2019] NSWSC 811
Hearing Date(s):	12 April 2019
Date of Orders:	12 April 2019
Decision Date:	28 June 2019
Jurisdiction:	Equity
Before:	Henry J
Decision:	Interlocutory orders made restraining the first defendant from using or disclosing certain client information derived from the plaintiff’s Property Tree system, delivery up of any of that information and provision of an affidavit. See orders annexed to these reasons.
Catchwords:	EQUITY – interlocutory injunction – restraint to prevent use or disclosure of confidential client information – plaintiff established prima facie case that first defendant had exported client contacts prior to his resignation – defendants would not suffer any loss or prejudice by the only order ultimately sought – interlocutory injunction granted on limited basis
Cases Cited:	Australian Broadcasting Corporation v Lenah Game Meats Pty Ltd (2001) 208 CLR 199; [2001] HCA 63 Australian Broadcasting Corporation v O'Neill (2006) 227 CLR 57; [2006] HCA 46 Beecham Group Ltd v Bristol Laboratories Pty Ltd [1968] HCA 1; (1968) 118 CLR 618 Digital Products Group v Opferkuch [2008] NSWSC 575 Isaac v Dargan Financial Pty Ltd ATF The Dargan Financial Discretionary Trust (ABN 68 702 047 521) (trading under the name of Home Loan Experts) [2018] NSWCA 163 John Fairfax Publications Pty Ltd v Birt [2006] NSWSC 995 Kolback Securities Ltd v Epoch Mining NL (1987) 8 NSWLR 533 Miles v Genesys Wealth Advisers Limited [2009] NSWCA 25 Telstra Corporation Ltd v First Netcom Pty Ltd [1997] FCA 860; (1997) 78 FCR 132 Weldon & Co v Harbinson [2000] NSWSC 272
Category:	Procedural and other rulings
Parties:	Macquarie Holdings (NSW) Pty Ltd T/as Macquarie Real Estate Casula (ACN 169 926 069) (plaintiff) Amit Maharaj (first defendant) AR & A Investments Pty Ltd t/as Platinum Property Estate Agents (ACN 627 914 783) (second defendant)
Representation:	Counsel: Ms A Power for the plaintiff Mr G Fredericks for the defendants Solicitors: Pagano Burlovich Lawyers for the plaintiff Circle Bridge Legal for the defendants
File Number(s):	2019/00103343

JUDGMENT

1. On 12 April 2019, I heard an interlocutory injunction application and made orders restraining the first defendant, Amit Maharaj, from using or disclosing certain client information derived from the plaintiff’s IT system known as Property Tree, and other orders in the terms annexed to this judgment. The parties were content for the orders to be made with reasons to follow. These are those reasons.

The parties and the issues

2. The plaintiff, Macquarie Holdings (NSW) Pty Ltd (Macquarie Holdings) operates and trades as a real estate agency in Casula, New South Wales, known as Macquarie Real Estate Casula.
3. The first defendant, Amit Maharaj, had been working at Macquarie Real Estate Casula until he resigned on 31 January 2019.
4. The second defendant, AR & A Investments Pty Ltd, was set up by the first defendant and, since at least March 2019, has operated and traded as Platinum Property Estate Agents, a real estate agency also located in Casula.
5. On 3 April 2019, the plaintiff commenced these proceedings by way of summons. By the time of the interlocutory hearing, the plaintiff had filed a statement of claim which set out its claims for interlocutory relief including orders restraining the defendants from:

“(a) Soliciting, attempting to solicit or accepting any instructions to perform any work from any Client (as that term is defined in clause 18.3(b) of the first defendant’s Employment Agreement dated 11 February 2011 (Employment Agreement)) of the plaintiff [the soliciting restraint];
(b) Carrying on or being engaged, concerned, interested directly or indirectly in carrying on any business for any Competitor (as that term is defined in clause 18.3(c) of the Employment Agreement) [the carrying on business restraint];
(c) Encouraging, condoning or enticing any other person or entity, in which the defendants are interested or by which the defendants are engaged, in engaging in any conduct which, if the first defendant were engaged in such conduct, would cause the first defendant to breach paragraph 18 of the Employment Agreement [the enticing breach restraint]; and
(d) Using, disclosing or attempting to use or disclose any Confidential Information (as defined in clause 1.1(e) of the Employment Agreement), including all Confidential Information exported from the plaintiff’s database [the confidential information restraint].

6. At the interlocutory hearing on 12 April 2019, the plaintiff informed the Court that it did not press its claims for interlocutory relief in respect of the carrying on business restraint and the enticing breach restraint. During the course of the hearing, it was also made clear that the plaintiff no longer pressed the soliciting restraint.
7. The issues for determination were, therefore, whether:
   • (a) there was a serious question to be tried that the defendants had accessed and used the plaintiff’s confidential client information (or there was a threat that they would do so), in breach of employment agreement obligations, fiduciary duties or other duties alleged to have been owed by the first defendant to the plaintiff;
   • (b) the balance of convenience was in favour of granting an interlocutory injunction; and
   • (c) there were any discretionary factors which tended against granting relief.

Background and evidence

8. The first defendant commenced employment with Macquarie Realty (NSW) Pty Limited (Macquarie Realty) in about February 2011, at which time Macquarie Realty owned and operated a real estate agency in Casula called Macquarie Real Estate Casula.
9. The first defendant’s employment was governed by a contract between him and Macquarie Realty dated 11 February 2011 (Employment Agreement). The Employment Agreement contains terms that purport to restrict the first defendant’s post-employment activities and impose obligations relating to his employer’s “Confidential Information”.
10. In February 2018, the plaintiff purchased the assets of Macquarie Realty and since that time, has also traded as Macquarie Real Estate Casula. The plaintiff alleges that, as part of the asset purchase from Macquarie Realty, the first defendant’s employment was transferred to the plaintiff and his employment with the plaintiff was governed by the terms of the Employment Agreement.
11. The first defendant continued working at Macquarie Real Estate Casula following the plaintiff acquiring Macquarie Realty’s assets and did so until he resigned with effect on 31 January 2019. The first defendant disputes that his employment at Macquarie Real Estate Casula (while operated by the plaintiff) was governed by the Employment Agreement and says that neither the pleadings nor the evidence support the proposition that his employment was transferred from Macquarie Realty to the plaintiff.
12. On 6 February 2019, the first defendant met with the plaintiff’s General Manager, Guiseppe Romeo, and advised Mr Romeo that he was going to open his own real estate agency. It is not disputed that they discussed and agreed that the first defendant could take over management of properties connected to the first defendant’s family from the plaintiff, although there is a dispute about which other properties the first defendant could take over and the terms on which he would do so. For the purposes of the interlocutory application, it was not necessary to make any determination in relation to that factual dispute.
13. Prior to departing Macquarie Real Estate Casula on 31 January 2019, the first defendant took steps in preparation of setting up his own real estate agency. These included incorporating the second defendant (of which the first defendant is the sole director and 50% shareholder) on 2 August 2018, arranging for the second defendant to register the business name Platinum Property Real Estate Agents on 7 August 2018 and, on 9 January 2019, guaranteeing the lease that the second defendant, trading as Platinum Property Real Estate Agents, entered into for premises in Casula.
14. On 4 March 2019, Platinum Property Estate Agents formally commenced operating out of the premises the second defendant leased in Casula. The plaintiff alleges that those premises are located in an area which is caught by the post-employment restriction in the Employment Agreement.
15. After the first defendant’s resignation, the plaintiff received an unexpectedly large number of termination notices for properties it managed, many of which are alleged by the plaintiff to now be managed by Platinum Property Estate Agents. The receipt of those termination notices led to the plaintiff undertaking inquiries in relation to the first defendant, including auditing the activities on the plaintiff’s online property management database known as Property Tree.
16. In addition to those inquiries, Mr Romeo received a call from a tenant of a property the plaintiff managed, in which the tenant indicated that he had been approached by the first defendant and advised that the property would be managed by another company, Fletcher Property Group, which was run by a person who the plaintiff believed was associated with the first defendant.
17. On 14 March 2019, the plaintiff’s solicitor sent a letter to the first defendant in which the plaintiff alleged that the first defendant had exported client lists and other purportedly confidential information from the plaintiff’s client relationship management system in breach of the Employment Agreement. That letter also alleged that the first defendant had breached the post-employment restrictions contained in the Employment Agreement which were not in issue at the interlocutory hearing.
18. Following an exchange of correspondence between the lawyers for the plaintiff and the first defendant, the plaintiff commenced these proceedings and alleges (among other things) that, while working at Macquarie Real Estate Casula, the first defendant accessed confidential client information belonging to the plaintiff which he and the second defendant have used in relation to the second defendant’s business, in breach of an express term of the Employment Agreement or, alternatively, in breach of an implied term, and fiduciary and other obligations owed by the first defendant to the plaintiff arising under the employment arrangement between them.

Evidence

19. The plaintiff’s application for interlocutory relief was supported by an affidavit of Mr Romeo sworn 2 April 2019, a further affidavit of Mr Romeo sworn 4 April 2019, an affidavit of Souha Sanjakdar sworn 3 April 2019, and a supplementary affidavit of Mr Romeo which was sworn and filed during the interlocutory hearing on 12 April 2019.
20. According to those affidavits, the plaintiff’s Property Tree database is an online software programme into which data relating to properties managed by the plaintiff is entered. That data includes the name and contact details of the proprietor and any tenants of the property, details about the property, rental payment details and other property income and expenses information. It is not in dispute that the first defendant had access to the Property Tree system while working at Macquarie Real Estate Casula and that his user profile name for that system was AMAHA.
21. Mr Romeo’s affidavit of 2 April 2019 exhibits an extract of a document titled ‘Information Audit Report’, which appears to be pages 37 and 39 of a 72-page report of all “transactions” on the Property Tree system for the period from 1 September 2018 to 3 March 2019. Those pages highlight line entries for “transactions” on 10 December 2018 at 10.27am and 10.28am and on 13 December 2018 at 12.35pm and 12.40pm for the user “AMAHA” and with the relevant action identified as “Export Contacts”. According to Mr Romeo’s affidavits of 2 and 12 April 2019, the “Contacts” referred to in “Export Contacts” comprises all the contact details for a landlord and tenant of a property managed by the plaintiff, including their address, phone number and rental amounts.
22. The plaintiff argues that the extract of the Information Audit Report demonstrates that the first defendant accessed the plaintiff’s Property Tree system on those dates and at those times and exported all the contact and property details for existing and prior clients of the plaintiff. It is asserted that the information obtained from the “Export Contacts” function includes confidential information of the plaintiff (being the identity of past and current clients, their contact details and rental amounts), and that the first defendant did not have the plaintiff’s permission or authorisation to access and export that information.
23. The plaintiff also relied on an expert report prepared by Dr Allan Watt, an independent expert in digital forensics. Dr Watt was given access to a PC and mobile phone which, he was instructed, had been used by the first defendant while working at the plaintiff’s real estate agency. Dr Watt took an image of the contents of the hard disk drive on the PC and used forensic tools to extract stored artefacts, search and analyse the data on that drive. From that analysis, he was of the opinion there was evidence of bulk copying and mass deletion of files from that PC in the days prior to the first defendant’s departure on 31 January 2019. This included the deletion of 15,000 files which were not recoverable. He was also of the opinion that during that period, a range of files had been accessed and uploaded to a Microsoft cloud account.
24. Dr Watt’s report included annexures which identified the files stored on the PC which had been accessed before the first defendant’s departure from Macquarie Real Estate Casula on 31 January 2019. Relevantly, those annexures identified that files had been accessed on the PC at certain times on the weekend before the first defendant left his employment, being between 11.28am to 12.43pm on Saturday, 26 January 2019 (Annexure D, page 5 at record 164, Annexure E, page 1 at record 26 and Annexure G at page 3 records 47 to 51 and page 4 at records 88 to 97), and that a USB device had been inserted into the PC at 3.07pm on Sunday 27 February 2019 (Annexure F, page 1 at record 1). Dr Watt’s report did not identify the contents of the files accessed or downloaded on those days or times other than by some descriptions, such as “rentals2/downloads/paymentbatchlistreport”, “rentals/downloads/batch151aba” and “rentals2/desktop/tenant%20Rent%20review.docx”.
25. Evidence in the form of a “Summary Panel Log Report” annexed to Mr Romeo’s supplementary affidavit of 12 April 2019 identified that the first defendant’s personalised security card was used to access the plaintiff's office several times on Saturday, 26 January 2019 and for a 4 minute period on Sunday, 27 January 2019 at the times referred to in Dr Watt’s report referred to above.
26. Plaintiff’s counsel accepted that Dr Watt’s report was preliminary and further work needed to be done to identify the nature and significance of the information that had been accessed on the relevant dates and times. Dr Watt’s report also noted that the PC had been accessed by others between the first defendant’s departure and Dr Watt’s review which may have contaminated the evidence. Despite these limitations, the plaintiff relied on the report in support of the submission that the first defendant had accessed confidential information belonging to the plaintiff which, in combination with the evidence of increased termination notices and contact from a tenant who had been approached by the first defendant, indicated that the first defendant had used that information (or there was a threat that he would) which justified making an order in the terms of the confidential information restraint.
27. The defendants relied on two affidavits from the first defendant affirmed on 4 and 12 April 2019 as well as an affidavit of Mario Battistini sworn 11 April 2019.
28. In his affidavit evidence, the first defendant denied that he used the “Export Contacts” function to download the plaintiff’s client information on 10 and 13 December 2018 as suggested by the extract from the Information Audit Report. His evidence was that, to the best of his recollection, he was out of the office on 13 December 2018 accompanying another of the plaintiff’s employees at a New South Wales Civil and Administrative Tribunal hearing in relation to a tenant’s rental dispute. The first defendant also gave evidence that his Property Tree login and password did not require manual entry each time, his login and password were generic and that at least one other person in the plaintiff’s office had his login and password details.
29. The first defendant also gave evidence in response to parts of Dr Watt’s expert report to the effect that certain files said to be accessed by him on 31 January 2019 (the day he left Macquarie Real Estate Casula) related to the usual course of his work for the plaintiff, being the preparation of an end of month report, an insurance claim for roof damage at a property which was (and still is) managed by the plaintiff and communications with the bank regarding the distribution of funds from the plaintiff's trust account to landlords. He also gave evidence that he did not, and had never, intentionally uploaded or copied a document to a Microsoft cloud account. The first defendant’s evidence did not respond to the details in Dr Watt’s report regarding the access to files and the use of a USB on the weekend before his departure.
30. Mr Battistini’s evidence explained that he had given the first defendant the contact details of the tenant in the property managed by the plaintiff who had contacted Mr Romeo.

Legal principles

31. The principles to be applied on an application for interlocutory relief are well known and were not in dispute at the hearing.
32. Where an interlocutory injunction is sought, it is necessary to identify the legal or equitable rights which are to be determined at trial and in respect of which final relief is sought: Australian Broadcasting Corporation v Lenah Game Meats Pty Ltd (2001) 208 CLR 199; [2001] HCA 63; Australian Broadcasting Corporation v O'Neill (2006) 227 CLR 57; [2006] HCA 46 at [54].
33. In Australian Broadcasting Corporation v O'Neill (2006) 227 CLR 57; [2006] HCA 46 at [65], Gummow and Hayne JJ (referring to Beecham Group Ltd v Bristol Laboratories Pty Ltd [1968] HCA 1; (1968) 118 CLR 618), stated that the party seeking interlocutory relief bears the onus of demonstrating that an injunction is appropriate having regard to two main enquiries:

"The first is whether the plaintiff has made out a prima facie case, in the sense that if the evidence remains as it is there is a probability that at the trial of the action the plaintiff will be held entitled to relief...The second inquiry is...whether the inconvenience or injury which the plaintiff would be likely to suffer if an injunction were refused outweighs or is outweighed by the injury which the defendant would suffer if an injunction were granted."

34. A prima facie case does not mean that the plaintiff must show that it is more probable than not that it will succeed at a final hearing. It is sufficient that the plaintiff shows a sufficient likelihood of success. How strong the likelihood or probability needs to be will depend on the nature of the rights a plaintiff asserts and the practical consequences likely to flow from the orders sought. The more drastic the orders sought, the stronger the plaintiff's case must be: Australian Broadcasting Corporation v O'Neill (2006) 227 CLR 57; [2006] HCA 46 at [65] and [71] per Gummow and Hayne JJ.
35. It is also to be borne in mind that the purpose of an interlocutory injunction is to preserve the status quo until final hearing: Australian Broadcasting Corporation v Lenah Game Meats Pty Ltd (2001) 208 CLR 199; [2001] HCA 63 at [62] per Gaudron J; at [64] per Gummow and Hayne JJ; at [162] per Kirby J.
36. A plaintiff seeking an injunction restraining the use of confidential information must specify with some precision the confidential information which it is alleged a defendant has accessed and used (or threatens to use), and to which the injunction should apply. This is because an injunction prohibiting a party from using undefined confidential information would be inappropriately vague and uncertain (leaving the restrained party unsure of exactly how to comply), while an injunction restraining the use of globally defined information only some of which was confidential could not be justified: Miles v Genesys Wealth Advisers Limited [2009] NSWCA 25 at [23] per Hodgson JA.
37. As observed by Brereton J in John Fairfax Publications Pty Ltd v Birt [2006] NSWSC 995 at [19]:

“A plaintiff who seeks to restrain a former employee from using confidential information must identify with specificity, and not merely in global terms, the relevant information...Although...even in the absence of a contract, equity imposes an obligation of confidence, the requirement for specificity is no less where a contractual obligation is sought to be enforced. One reason for this is that an injunction in general terms restraining a former employee from using the employer’s “confidential information”, would inappropriately leave, to an application for contempt, determination of whether particular information was or was not confidential...[citations omitted].”

Determination

38. In determining an application for interlocutory relief, the Court does not typically “undertake a preliminary trial, and give or withhold interlocutory relief upon a forecast as to the ultimate result of the case”: Beecham Group Ltd v Bristol Laboratories Pty Ltd [1968] HCA 1; (1968) 118 CLR 618 at 622.
39. This was not a case which warranted departure from that approach because a grant of interlocutory relief would not have had the practical effect of conclusively determining the dispute between the parties. The Court was, therefore, not required to definitively assess the strength of the plaintiff’s claim for final relief: Kolback Securities Ltd v Epoch Mining NL (1987) 8 NSWLR 533 at 536.
40. In their written submissions, the defendants contended that the plaintiff was not entitled to an injunction in the terms sought because the statement of claim did not adequately plead that the information taken by the first defendant was confidential information either under the Employment Agreement or in equity and only referred to “contacts of the plaintiff”. The defendants also contended that the evidence relied on did not rise to the level of a prima facie case or indicate there was a serious question that the first defendant had accessed and used the plaintiff’s confidential information.
41. While there was force to the defendants’ submissions, I considered it appropriate to grant an interlocutory order restraining the defendants from using client information derived from the plaintiff’s Property Tree system in this case. This was because the evidence supported there being a serious question that the first defendant had accessed and used (or may use) confidential client information of the type derived from the Property Tree system in breach of the obligations he owed to the plaintiff, and the balance of convenience was in the plaintiff’s favour given the defendants would not be prejudiced by an injunction on the terms eventually proposed.
42. I accepted the defendants’ submissions that the plaintiff’s statement of claim should more clearly specify the nature of the plaintiff’s confidential information that the first defendant is alleged to have accessed and used and should plead an equitable duty of confidence if it was to be relied upon (as it appeared to be part of the plaintiff’s claim at the hearing).
43. However, the statement of claim makes clear the rights the plaintiff asserts the first defendant has interfered with, being the right to protect the plaintiff’s confidential information, and the obligations that give rise to those rights, being obligations arising from the Employment Agreement, an implied term under the first defendant’s employment with the plaintiff and a duty of loyalty and fidelity or fiduciary duty (see paragraphs [11], [14]-[18] of the statement of claim). When combined with the evidence relied on by the plaintiff as to the nature and meaning of “Export Contacts”, it is also apparent what is meant by the reference in the statement of claim to the “first defendant exported the plaintiff’s client contacts (being confidential information of the plaintiff)”. The statement of claim also pleads that the first defendant used confidential information at paragraphs [38] and [39] by approaching the tenants in a property managed by the plaintiff.
44. The realities of interlocutory applications must also be borne in mind. A plaintiff’s pleading may not always be comprehensive in such applications, having been prepared in more urgent circumstances than usual, and while further factual inquiries are ongoing. An injunction may nevertheless be appropriate where the pleading does sufficiently (albeit imprecisely) identify a serious question to be tried: see Australian Broadcasting Corporation v Lenah Game Meats Pty Ltd (2001) 208 CLR 199; [2001] HCA 63 at [159] per Kirby J.
45. In that context, I accepted there was a sufficient basis to proceed in respect of the misuse of confidential information claim as against the first defendant but on the basis that the plaintiff would be amending the statement of claim to clarify matters in the pleading regarding the nature of the confidential information alleged to have been accessed and used.
46. I was not satisfied that the plaintiff had established a proper basis for relief against the second defendant because the statement of claim did not include any pleading in relation to them and refused to make any orders restraining the second defendant.
47. Based on the evidence adduced at the interlocutory hearing, I was also satisfied that there was a serious question to be tried that the first defendant had accessed confidential client information belonging to, and derived from the Property Tree system of, the plaintiff in circumstances which gave rise to a credible threat that it might be used by the first defendant in the future. I make the following observations based on the evidence.
48. There is a factual dispute which will need to be resolved at the final hearing as to whether the first defendant undertook certain activities on 10 and 13 December 2018, namely exporting the plaintiff’s client contact and property details on the plaintiff’s Property Tree system as referred to in the extract of the Information Audit report. The first defendant’s evidence (about what he recalls doing on 13 December 2018, the use of generic passwords and the ability of others to access the plaintiff’s system using his account) did not, in my view, overcome the evidence the plaintiff adduced to indicate that that he did access and export those details on 10 December 2018.
49. As to whether the client and property details on Property Tree were confidential to the plaintiff, the defendants did not seriously contest that lists of the plaintiff’s clients, their contact details and related information could constitute confidential information of the plaintiff either under contract, an equitable duty of confidence or pursuant to one of the other pleaded obligations.
50. Although client contact details may not always be confidential or may be of a low order of confidentiality, the evidence did not suggest, and the defendants did not submit, that the client information stored on or derived from the plaintiff’s Property Tree system was in the public domain or was all information that the first defendant could recall from memory. Customer lists have been accepted to be confidential and in the nature of information courts will protect by injunctive relief: Telstra Corporation Ltd v First Netcom Pty Ltd [1997] FCA 860; (1997) 78 FCR 132 at 138; Isaac v Dargan Financial Pty Ltd ATF The Dargan Financial Discretionary Trust (ABN 68 702 047 521) (trading under the name of Home Loan Experts) [2018] NSWCA 163 at [152].
51. In my view, it was seriously arguable that the information in the “Contacts” from the Property Tree system, being details of the plaintiff’s actual and past clients, rents paid by tenants and other income and expense information was confidential to the plaintiff and also useful to the first defendant in the context of him now operating a competing real estate business in the same area. This is to be contrasted with the type of general information an employee may absorb into their mind during the course of their employment. In the absence of any contractual provision to the contrary, an employee is entitled to use such general information after their employment ceases: Digital Products Group v Opferkuch [2008] NSWSC 575 at [17]- [20]; Weldon & Co v Harbinson [2000] NSWSC 272 at [70]-72].
52. The forensic evidence of Dr Watt when combined with the information in the Summary Panel Log Report, presented a compelling case that the first defendant accessed a large number of files on his work computer on the weekend before his departure and inserted a USB into the PC. While some of this activity might be explained as being undertaken by the first defendant for the purposes of completing his work, the first defendant’s evidence was silent as to why he was present and accessing files at the plaintiff’s office on the weekend before his departure.
53. The client and property details were exported in December 2018, approximately 6 weeks prior to the first defendant’s resignation. This was in the context where the evidence indicated that the first defendant had taken steps to incorporate a new business (the second defendant) in August 2018 and establish a rival real estate agency in early January 2019. The acts in December 2018 also need to be considered together with the first defendant’s presence in the plaintiff’s premises on the Saturday and Sunday before he resigned, during which his PC was used to access a range of files and a USB drive. The totality of that evidence suggests that the defendant embarked on a course of conduct to access confidential client and property-related information of the plaintiff which was not fully explained and will need to be dealt with at a final hearing.
54. There was only sparse evidence to suggest that the first defendant had already used the confidential information in question. The plaintiff suggested that the first defendant’s contact with the tenants in one of its properties comprised evidence of such use. This incident, however, is explained by Mr Battistini’s evidence. Nonetheless, it seemed seriously arguable that there was a credible threat that the first defendant might use the plaintiff’s confidential information in the future. He has an incentive to do so given he has set up a competing real estate agency in the same suburb as the plaintiff’s agency, and it appears that he may have placed himself in a position to do so by accessing a significant volume of client information on 10 December 2018, and possibly on the weekend before his departure.
55. On that basis, I was satisfied that the plaintiff’s misuse of confidential information action is seriously arguable. There was evidence to support the argument that the first defendant exported, accessed and downloaded confidential client information derived from the plaintiff’s Property Tree system. The plaintiff has established a prima facie case that doing so (and then using that information after he had left his employment at Macquarie Real Estate Casula) would either be a breach of the first defendant’s contractual duties (under the Employment Agreement or otherwise), his fiduciary duties to the plaintiff, or an equitable duty of confidence.
56. In written submissions, the defendants raised the balance of convenience as being in their favour as interlocutory relief would cause the first defendant to suffer substantial loss, damages are an adequate remedy (because the plaintiff’s loss of a client could be readily quantified based on the formula put forward by the plaintiff in discussions with the first defendant on 6 March 2019), and the plaintiff’s delay in seeking interlocutory relief was disentitling.
57. Those propositions were apt in respect of the carrying on business, enticing breach and soliciting restraints given the potential negative impact such orders (if made) would have on the defendants’ business. But the defendants’ counsel conceded that the confidential information restraint would not have such an effect and would not prejudice his client: [T:40:9-14]. He also conceded that he had been considering the balance of convenience arguments in the context of the other restraints claimed and had not considered it on the use of confidential information case [T:40:1-7].
58. Indeed, in response to the plaintiff limiting its claims for relief, defendants’ counsel indicated that if the defendants had known the plaintiff’s application would solely concern confidential information such as a client list, they “wouldn't be here” and that he had expected the majority of the dispute to concern the terms of the Employment Agreement and the other restraints: [T:13:30-45, T:40:16-17]. The issue of whether damages are an adequate remedy also did not arise in oral argument on the confidential information restraint.
59. As to delay, the proceedings were commenced on 3 April 2019, approximately one month after the second defendant formally began operating and after the exchange of correspondence between the solicitors for the plaintiff and the defendants in which the allegation regarding the use of the plaintiff’s confidential information had been raised. The plaintiff’s solicitor’s initial letter to the first defendant appears to have been sent soon after the plaintiff prepared the Information Audit and made further inquiries. Some part of the delay can be explained by the exchange of correspondence and the gathering of the necessary evidence to make the application itself, including Dr Watt’s report.
60. This is not a situation in which the plaintiff had allowed months to pass before commencing proceedings. Nor was it a case where the delay occasioned any real prejudice to the defendants, particularly as the only interlocutory relief that was ultimately pressed was in respect of the confidential information restraint. I accept that applications for interlocutory relief must be brought promptly and that delay is a matter going to the balance of convenience, but I did not consider the delay in this case was sufficient to tip the balance and warrant refusing the application.
61. Accordingly, I considered that the balance of convenience was in favour of granting some form of order restraining the first defendant from using the plaintiff’s confidential client information, but that the terms of the order should be more limited than the confidential information restraint sought by the plaintiff.
62. As to the terms of the confidential information restraint, I accepted the defendants’ submission that it was too broad as it did not identify with specificity the nature of the confidential information which was the subject of the restraint, relying as it did on the broad definition of “Confidential Information” in the Employment Agreement. That form of restraint also goes beyond the scope of the confidential client information put in issue by the evidence and the pleadings, which focused on client and property details contained in the plaintiff’s Property Tree system. I also considered that it was not appropriate to make an order by reference to the Employment Agreement where there was no pleading or evidence showing how the first defendant became an employee of the plaintiff other than a bare assertion that the Employment Agreement was transferred to the plaintiff.
63. During the course of the hearing, and on a no admissions basis, the parties negotiated the terms of a proposed order which, after some input from the Court, was limited to restraining the first defendant from using or disclosing client information obtained or derived by the first defendant from the plaintiff’s Property Tree system but excluding information that is publicly available and relates to properties and clients referred to in certain paragraphs of the affidavit of Mr Romeo (Client Information).
64. As is not unusual in confidential information cases, I also made ancillary orders regarding the delivery of any Client Information and an affidavit concerning the steps the first defendant took in relation to that Client Information.

Conclusion

65. Ultimately, I was satisfied that the claims made and the evidence before the Court indicated that there was a serious question to be tried that the first defendant had, in breach of his duties, exported the plaintiff’s confidential client information on 10 December 2018 and accessed a large number of files on the weekend before he resigned, which information was likely to be of value to the plaintiff and might be used by the first defendant in his new business. Nonetheless, I also recognised there were arguments against an injunction having regard to the state of the pleading and preliminary nature of the evidence relied on by the plaintiff, including queries about exactly what information was contained in the files the first defendant accessed on that weekend.
66. In my view, the status quo was best preserved by making an order which would protect the misuse and disclosure of the plaintiff’s client information derived from the Property Tree system, but would not impede the defendants’ legitimate business activities until the proceedings are resolved at a final hearing.
67. As indicated earlier in these reasons, it was accepted that the first defendant would not suffer any hardship if he was restrained from using any client information derived from the plaintiff’s Property Tree system. It was also apparent that the defendants had come to Court focused on defending the other restraints that the plaintiff initially sought.
68. For those reasons, I made the orders in the terms annexed.
69. Given the way the case was run, I reserved the question of costs so that the parties could make submissions on that issue in the context of the outcome of the final hearing and these reasons.

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ANNEXURE A

The Court makes the following orders:

(1) Upon the plaintiff giving the usual undertaking as to damages, the first defendant must not, until further order of the Court, use or disclose any client information (including any information relating to the sellers, buyers, prospective sellers and buyers of the plaintiff, any property owner on whose behalf a property is managed by the plaintiff and all tenants) obtained or derived by the first defendant from the plaintiff’s property management system known as Property Tree but not including any such information that is publicly available or that relates to those properties and clients referred to in paragraphs 19, 20 and 21d of the affidavit of Giuseppe Romeo sworn 2 April 2019 (Client Information).
(2) The first defendant, within 7 days from the date of this Order, deliver up to the plaintiff in verified form, the original and all copies of any Client Information.
(3) The first defendant provide an affidavit within 7 days of the date of this Order, deposing to

• (a) any steps the first defendant took to export any Client Information;
• (b) any steps the first defendant took to send or forward any Client Information to the second defendant; and
• (c) any steps which the first defendant took in relation to the Client Information.

(4) Note that order 1 of the orders of Lindsay J made on 4 April 2019 is no longer in effect.
(5) Relist the matter before the Equity Registrar for directions on 18 April 2019.
(6) Liberty to apply on 3 days’ notice.
(7) Costs reserved.

Amendments

01 July 2019 - date of decision amended to reflect date reasons were handed down.