In the recent decision of Agha v Devine Real Estate [2021] NSWCA 29, the NSW Court of Appeal considered a scenario where Party A, a former shareholder in and employee of Company R, ceased being a shareholder, quit his employment, and set up a competing business in the same industry.

Before leaving the employ of Company R and before ceasing to be a shareholder in Company R:

– Party A arranged for another employee of Company R to send Party A Company R’s client lists; and

– On the day Party A gave notice, they intended to set up a competing business, a person using Party A’s password-protected username changed 905 contacts in Company R’s database by altering a digit or digits for each phone number.

At first instance, each was found to be a breach of confidence attributable to Party A.

The inference was available that Party A was responsible for the sabotage, especially as A did not cross-examine R’s witness or give evidence. Party A sought to appeal this finding in the Court of Appeal but failed.

The client lists were confidential and not part of Party A’s own knowledge (as shown by Party A, causing the lists to be emailed to their personal address). The conduct was restrained by contract and also by equity.

The fact that Company R put the confidential information into affidavit evidence as part of the litigation did not place it in the public domain and so did not release Party A from duties of confidence.

Party A’s appeal failed. (Apart from some issues like the form of some of the Court orders.)

This decision illustrates the solemnity and importance of appropriately dealing with other parties’ confidential information.

 

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