Gold Titan Pty Ltd v Lopez (No 2)

• Jurisdiction: Australia Federal only
• Judgment Date: 03 December 2021
• Neutral Citation: [2021] FCA 1523
• Court: Federal Court
• Date: 03 December 2021

Federal Court of Australia

Gold Titan Pty Ltd v Lopez (No 2) [2021] FCA 1523

File number:	NSD 1924 of 2019
Judgment of:	ABRAHAM J
Date of judgment:	3 December 2021
Catchwords:	DAMAGES – assessment of damages for breach of contractual obligation of confidentiality and equitable obligation of confidence – assessment of damages for contravention of Australian Consumer Law
Legislation:	Competition and Consumer Act 2010 (Cth) Sch 2 (Australian Consumer Law) s 18
Cases cited:	Cadbury Schweppes Inc v FBI Foods (1999) 59 BCLR(3d) 1; (1999) 167 DLR (4th) 577 Flogas Britain v Calor Gas [2013] EWHC 3060 (Ch) Gold Titan v Lopez [2021] FCA 918 Interfirm Comparison (Australia) Pty Ltd v Law Society of New South Wales [1975] 6 ALR 445 Robb v Green [1895] 2 QB 1 Seager v Copydex (No 2) [1969] 2 All ER 718 Talbot v General Television Corporation Pty Ltd [1980] VR 224 Wilson v United Counties Bank Ltd [1920] AC 102
Division:	General Division
Registry:	New South Wales
National Practice Area:	Commercial and Corporations
Sub-area:	Regulator and Consumer Protection
Number of paragraphs:	76
Date of last submission/s:	9 November 2021
Date of hearing:	Determined on the papers
Counsel for the Applicant:	Mr M Hall SC
Solicitor for the Applicant:	Banki Haddock Fiora
Counsel for the Respondents:	Mr J Knackstredt
Solicitor for the Respondents:	Somerville Legal

ORDERS

		NSD 1924 of 2019
BETWEEN:	GOLD TITAN PTY LTD (TRADING AS EVAGROUP ABN 47 124 061 169) Applicant
AND:	NICHOLAS LOPEZ First Respondent ; IMPERIAL FLOORING AUSTRALIA PTY LTD (ACN 635 477 593) Second Respondent ; CEMIMAX AUSTRALIA PTY LTD (ABN 71 623 150 014) (and another named in the Schedule) Third Respondent

order made by:	ABRAHAM J
DATE OF ORDER:	3 December 2021

THE COURT ORDERS THAT:

1. The parties are to confer about the form of the orders to give effect to these reasons and those in the Liability Judgment (Gold Titan v Lopez [2021] FCA 918).

2. The parties are to provide written submissions on the issue of costs.

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

REASONS FOR JUDGMENT

ABRAHAM J:

1. These reasons address the issue of the remedy that arises as a result of the decision in Gold Titan v Lopez [2021] FCA 918 (the Liability Judgment). In that decision, the Court found:

1. Mr Nicholas Lopez, the first respondent, breached his contractual obligation of confidentiality, and that he and Imperial Flooring Australia Pty Ltd (Imperial Flooring), the second respondent, breached their equitable obligation of confidence by using the “Evagroup Customer List” (as defined in the Liability Judgment at [3]);

2. Imperial Flooring and Mr Lopez breached s 18 of the Australian Consumer Law (ACL) by making certain statements on its website and in unsolicited emails to potential customers;

3. the applicant’s claim for defamation was dismissed; and

(being the findings in relation to NSD 1924 of 2019)

4. there was no proper basis for Gold Titan Pty Ltd, trading as Evagroup (Evagroup), to offset the invoice dated 31 July 2019 from Cemimax Australia Pty Ltd (Cemimax) for Cemimax products it purchased.

(being the finding in relation to NSD 482 or 2020).

2. In light of the reasons, the parties were given an opportunity to provide further written submissions and evidence in relation to the relief they seek in the proceedings NSD 1924 of 2019.

3. A number of declarations are sought by the applicant, which are not opposed. The applicant also seeks an order that the first and second respondents provide “on affidavit a list of all of the customers to whom the first and/or second respondents have sent a communication in an attempt to solicit or procure business for the second respondent”. This is opposed by the respondents in those broad terms, and I will return to this issue below.

4. The principal issue of contention is what damages are to be paid, if any, as a result of the contravening conduct. These reasons focus primarily on that aspect.

5. For the reasons below, I order relief for the breaches of confidence and the ACL contraventions of $150,000.

Legal principles

6. In respect to the breach of contract, the purpose of awarding damages is to put the applicant in the position, so far as money can, that it would have been in had the wrongdoer not breached its contract. Similarly, the aim of equitable compensation is to compensate the applicant for the loss he or she has suffered as a result of a respondent’s breach: Interfirm Comparison (Australia) Pty Ltd v Law Society of New South Wales [1975] 6 ALR 445 at 446. There is no fixed method to achieving that outcome, and the court should assess damages using a method which, on the facts of the case, seem most appropriate to fulfil that general purpose: see also Talbot v General Television Corporation Pty Ltd [1980] VR 224 at 253.

7. Recognised approaches include that of neutralising a springboard advantage obtained by the respondent: Seager v Copydex (No 2) [1969] 2 All ER 718. In cases where the applicant uses the information in operating its own business, the advantage can be measured by assessing the reduction in the applicant’s sales: Cadbury Schweppes Inc v FBI Foods (1999) 59 BCLR(3d) 1; (1999) 167 DLR (4th) 577. This is to neutralise the unfair head start the new business obtains by using the confidential information.

8. In employment cases, damages are not limited to the loss of trading profits and can extend to diminution in goodwill, see for example, Robb v Green [1895] 2 QB 1 (Robb v Green). An absence of precise proof is not a reason to withhold damages. In Robb v Green it was observed at 20:

the specific instances as yet traced to the defendant’s action are, it is true, but few; but still their loss does not form the limit of the injury to the plaintiff, for the wholesale canvass of his customers was likely to influence many and diminish permanently his receipts and profits...

9. The respondents did not take issue with the principles as described above, but rather their application.

10. Relevantly, for this case the applicant contended that the breach of contract does not have to be the sole cause of the loss. If it is a cause in fact of the loss, then damages are recoverable unless some other event has broken the chain of causation. Where the alleged break is an act of the claimant, the principle is said to be as articulated by Lord Atkinson in Wilson v United Counties Bank Ltd [1920] AC 102 at 125:

If one man inflicts an injury upon another the resort by the sufferer to reasonable expedients for the bona fide purpose of counteracting… or lessening the evil effects of the injury done him, does not necessarily absolve the wrongdoer, even though the sufferer’s efforts should, in the result, undesignedly aggravate the result of the injury.

Submissions

11. In summary, the applicant contends that damages for loss of profits, loss due to discounting prices, loss of goodwill and damage to reputation and hurt feelings should be awarded against the first and second respondents (together, the respondents) jointly and severally.

12. In relation to the breach of the equitable duty of confidence, the applicant submitted the loss of profit arising from customers moving to the...