Agility CIS Ltd v White

• Jurisdiction: Australia Federal only
• Judgment Date: 23 September 2021
• Neutral Citation: [2021] FCA 1145
• Court: Federal Court
• Date: 23 September 2021

Federal Court of Australia

Agility CIS Ltd v White [2021] FCA 1145

File number(s):	VID 195 of 2021
Judgment of:	ANDERSON J
Date of judgment:	23 September 2021
Catchwords:	PRACTICE AND PROCEDURE – application pursuant to rr 16.21 and 26.01 of the Federal Court Rules 2011 (Cth) and s 31A(2) of the Federal Court of Australia Act 1976 (Cth) to strike out and/or give summary judgment in relation to parts of the applicants’ statement of claim – where the applicant alleges a misuse of confidential information – where the applicant has failed to articulate the misuse with sufficient precision – where the applicants’ claims in their current form are speculative in nature – application to strike out pleadings pursuant to r 16.21 of the Federal Court Rules 2011 allowed
Legislation:	Federal Court Rules 2011 (Cth) Federal Court of Australia Act 1976 (Cth)
Cases cited:	Creative Brands Pty Ltd v Franklin [2001] VSC 338 Liberty Financial Pty Ltd v Scott (No 4) (2005) 11 VR 629 Lynx Engineering Consultants Pty Ltd v The ANI Corporation Ltd (No 2) [2009] FCA 363 Ocular Sciences Ltd v Aspect Vision Care Ltd [1997] RPC 289 Pioneer Concrete Services Limited v Galli (1985) VR 675 Reinforced Plastics Applications (Swansea) Limited v Swansea Plastics & Engineering Co Limited [1979] FSR 182
Division:	General Division
Registry:	Victoria
National Practice Area:	Employment and Industrial Relations
Number of paragraphs:	47
Date of hearing:	16 September 2021
Counsel for the Applicants:	Mr L Merrick
Solicitor for the Applicants:	Corrs Chambers Westgarth
Counsel for the Respondents:	Mr S Rebikoff
Solicitor for the Respondents:	Clyde & Co

ORDERS

		VID 195 of 2021
BETWEEN:	AGILITY CIS LTD (and another named in the schedule) First Applicant
AND:	LEE WHITE (and others named in the schedule) First Respondent

order made by:	Anderson j
DATE OF ORDER:	23 SEPTEMBER 2021

THE COURT ORDERS THAT:

1. The Applicants’ Statement of Claim dated 22 April 2021 be struck out pursuant to r 16.21 of the Rules.

2. Leave is granted for the Applicants to file an Amended Statement of Claim by 4.00 p.m. on 30 November 2021, or such other time as may be agreed by the parties

3. The Applicants pay the Respondents’ costs of the application on a lump sum basis to be agreed or in default of agreement in such lump sum as determined by a Registrar of this Court.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

ANDERSON J:

Introduction

1. The substantive claim in this proceeding relates to the alleged misuse of confidential information by a group of former employees (Mr White (First Respondent), Mr Chandiramani (Second Respondent) and Ms Yang (Third Respondent) (together Respondents)) of Agility CIS Ltd and Agility CIS Pty Ltd (Applicants). The Fourth Respondent, Beige Technologies Pty Ltd is a company that now employs and is owned, in part, by the First to Third Respondents. The Fourth Respondent is alleged to have aided, abetted, counselled or procured, or been knowingly or indirectly concerned in the alleged misuse of information by the First to Third Respondents.

2. By interlocutory application dated 26 July 2021, the Respondents seek orders that:

1. the proceeding be dismissed pursuant to r 26.01 of the Federal Court Rules 2011 (Cth) (Rules) and/or s 31A of the Federal Court of Australia Act 1976 (Cth) (Act); or

2. the Applicants’ Statement of Claim dated 22 April 2021 be struck out pursuant to r 16.21 of the Rules.

3. The Respondents submit that the Statement of Claim fails to specify either the precise nature of the confidential information that is said to have been misused or the manner of alleged misuse, and advances a claim which appears to be wholly speculative in character.

4. The Respondents, in support of their application, rely on the affidavit of Nicole Joy Wearne dated 26 July 2021 (Wearne affidavit) and written submissions dated 27 August 2021. The Respondents also rely on the affidavit of Katherine Louise Hay affirmed 18 August 2021 (Hay affidavit).

5. The Applicants oppose the application and submit that the application for summary dismissal and the strike out application, should both be refused. The Applicants rely upon the Hay affidavit and written submissions dated 9 September 2021.

6. The application was heard before me on 16 September 2021. Mr Rebikoff of counsel appeared on behalf of the Respondents. Mr Merrick of counsel appeared on behalf of the Applicants.

Relevant principles

7. The relevant principles in determining this application were conveniently summarised by the Respondents in their submissions as follows.

8. Pursuant to r 16.02(1) of the Rules, a pleading must (relevantly) state the material facts on which a party relies that are necessary to give the opposing party fair notice of the case to be made against that party at trial.

9. Pursuant to r 16.02(2) of the Rules, a pleading must not:

1. be evasive or ambiguous;

2. be likely to cause prejudice, embarrassment or delay in the proceeding;

3. fail to disclose a reasonable cause of action or defence; or

4. otherwise be an abuse of the process of the Court.

10. In the context of a claim for misuse of confidential information, it has often been said that it is vital that the information which is said to be confidential is defined with precision, and the disclosure or use of that information which is said to constitute a misuse of that information is specified with particularity. In Pioneer Concrete Services Limited v Galli (1985) VR 675 (Pioneer) at 711, the Court observed:

What is important in the present case, as in all other cases of this kind, is that the court should be able, both, to define the precise nature of the confidential information which it is sought to protect and to identify with some particularity the disclosure or use which is alleged against the defendants.

11. One of the reasons the courts insist on such specificity is to avoid the bringing of actions that are merely speculative in character, and to prevent a former employer from using a generally worded claim to stifle the right of an employee to use the skill and experience of that employee (or their “know-how”): see Creative Brands Pty Ltd v Franklin [2001] VSC 338 (Creative Brands) at [16] per Warren J; Liberty Financial Pty Ltd v Scott (No 4) (2005) 11 VR 629 (Liberty Financial) at [12]-[13] per Harper J.

12. In Reinforced Plastics Applications (Swansea) Limited v Swansea Plastics & Engineering Co Limited [1979] FSR 182 at 182, Whitford J identified the risk of abuse arising from a generally worded claim for misuse of confidential information as follows:

It is, I think, a matter of great concern in relation to confidential information cases that actions should not be brought which are no more than speculative in character. It is altogether too easy when employees leave and are employed by a rival firm to harass that rival firm upon the basis that the employees who have left the plaintiffs and joined them have taken away trade secrets of great value, and to bring an action which may involve the expenditure of an enormous amount of time and money and include disclosure of information which is going to be alleged to be confidential on either side with consequent troubles and worries. It is not really to be contemplated that proceedings of this kind should be allowed to go forward on nothing more than a speculative basis; and, unless the plaintiff can show that he has some basis for a reasonable belief in his assertion that the defendants are making use of his confidential information, then the action can only be characterised as speculative and fishing, and ought not, in my judgment, to be allowed to proceed. There must be something more than a mere...