Lopez v Gold Titan Pty Ltd

• Jurisdiction: Australia Federal only
• Judgment Date: 12 July 2022
• Neutral Citation: [2022] FCAFC 117
• Date: 12 July 2022
• Court: Full Federal Court (Australia)

Federal Court of Australia

Lopez v Gold Titan Pty Ltd [2022] FCAFC 117

Appeal from:	918
File number:	NSD 34 of 2022
Judgment of:	RARES, STEWART AND GOODMAN JJ
Date of judgment:	12 July 2022
Catchwords:	HIGH COURT AND FEDERAL COURT – adequacy of reasons for decision – where primary judge criticised much of the evidence and submissions on loss of profit – where limited findings on or reasoning to briefly stated conclusion on quantum of loss – whether reasons adequate
Legislation:	Australian Consumer Law ss 18 and 236 Competition and Consumer Act 2010 (Cth) Sch 2
Cases cited:	AK v Western Australia [2008] HCA 8; 232 CLR 438 Berry v CTL Secure Pty Ltd [2020] HCA 27; 381 ALR 427 Commonwealth v Amann Aviation Pty Ltd [1991] HCA 54; 174 CLR 64 DL v The Queen [2018] HCA 26; 266 CLR 1 Fightvision Pty Ltd v Onisorou (1999) 47 NSWLR 473 Fink v Fink (1946) 74 CLR 127 Flogas Britain Ltd v Calor Gas Ltd [2013] EWHC 3060 (Ch) General Tire and Rubber Company v Firestone Tyre and Rubber Company Ltd (1976) 93 RPC 197 Generic Health Pty Ltd v Bayer Pharma Aktiengessellschaft (2018) 267 FCR 428 Gold Titan Pty Ltd v Lopez (No 2) [2021] FCA 1523 Gold Titan Pty Ltd v Lopez [2021] FCA 918 Jones v Schiffmann [1971] HCA 52; 124 CLR 303 Lamb v Evans [1893] 1 Ch 218 McRae v Commonwealth Disposals Commission (1951) 84 CLR 377 North East Equity Pty Ltd v Proud Nominees Pty Ltd [2010] FCAFC 60; 269 ALR 60 One Step (Support) Ltd v Morris-Garner [2018] UKSC 20; [2019] AC 649 PKT Technologies (formerly known as Fairlight.AU Pty Ltd) v Peter Vogel Instruments Pty Ltd (2020) 376 ALR 55 Placer (Granny Smith) Pty Ltd v Thiess Contractors Pty Ltd (2003) 196 ALR 257 Ratcliffe v Evans [1892] 2 QB 524 Robb v Green [1895] 2 QB 1 Robb v Green [1895] 2 QB 315 Searle v Commonwealth of Australia (2019) 100 NSWLR 55 Sellars v Adelaide Petroleum NL [1994] HCA 4; 179 CLR 332 Selvanayagam v University of the West Indies [1983] 1 WLR 585; [1983] 1 All ER 824 Wainohu v New South Wales [2011] HCA 24; 243 CLR 181 Wessex Dairies Ltd v Smith [1935] 2 KB 80
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Number of paragraphs:	110
Date of hearing:	10 May 2022
Counsel for the Appellants:	Mr J P Knackstredt and Mr P C Gledson
Solicitor for the Appellants:	Somerville Legal Solicitors
Counsel for the Respondent:	Mr M R Hall SC
Solicitor for the Respondent:	Banki Haddock Fiora

ORDERS

		NSD 34 of 2022
BETWEEN:	NICHOLAS LOPEZ First Appellant ; IMPERIAL FLOORING AUSTRALIA PTY LTD ACN 635 477 593 Second Appellant
AND:	GOLD TITAN PTY LTD ABN 47 124 061 169 Respondent

order made by:	RARES, STEWART AND GOODMAN JJ
DATE OF ORDER:	12 july 2022

THE COURT ORDERS THAT:

1. The appeal be allowed.

2. Order 1 of the orders made on 17 December 2021 be set aside.

3. The matter be remitted to the primary judge for the provision of further reasons on the quantum of damages.

4. The costs of the appeal be reserved.

5. The respondent file and serve any evidence and submissions of no more than 3 pages on the costs of the appeal within 14 days of these orders.

6. The appellants file and serve any evidence and submissions of no more than 3 pages on the costs of the appeal within 21 days of these orders.

7. The respondent file and serve any submissions in reply of no more than 2 pages on the costs of the appeal within 28 days of these orders.

8. Unless a party requests an oral hearing in its submissions on the costs of the appeal, the costs of the appeal be decided on the papers.

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

REASONS FOR JUDGMENT

RARES J:

1. The central issue in this appeal is whether the primary judge gave sufficient reasons for her award of $150,000 damages to the respondent, Gold Titan Pty Ltd, trading as Evagroup. Evagroup employed the first appellant, Nicholas Lopez between 1 April 2019 and his resignation which took effect on 12 August 2019. When Mr Lopez resigned he immediately established his own business, the second appellant, Imperial Flooring Australia Pty Ltd and began competing with Evagroup using its confidential customer list that her Honour found Mr Lopez had taken in breach of his fiduciary duty as employee and his contract of employment.

The primary judge’s liability reasons

2. In her liability reasons published on 5 August 2021, her Honour found that when Mr Lopez began his employment with Evagroup, part of its business was the resale of various floor levelling products that it acquired from Cemimax Australia Pty Ltd. Up to then, Evagroup had been the sole reseller in Australia of those products. Cemimax stored its products, that it imported from its Chinese parent company, at Evagroup’s warehouse. Both Cemimax and Evagroup sold the Cemimax products directly to their customers.

3. At around the time that Mr Lopez was first employed, the relationship had been deteriorating between Evagroup, its principal, Peter Yates, and Cemimax and John Titus, Cemimax’s national sales director. By mid-June 2019, Cemimax had obtained its own warehouse. Mr Titus informed Mr Yates that henceforth Cemimax would no longer store new imports in Evagroup’s warehouse. Cemimax also began distributing its products to another reseller, Top Level Supply Pty Ltd, after it had commenced business on 4 July 2019.

4. The primary judge found that from about 20 May 2019, Mr Lopez had access to Evagroup’s electronic customer list. She found that he retained a copy of the customer list after he ceased employment and then used it on behalf of Imperial to communicate with, and solicit business from, persons on that list.

5. Her Honour found that before he had resigned his employment with Evagroup, as an indication of his plan to set up his own business, on 8 August 2019 Mr Lopez had created a document entitled “Imperial Flooring Mobile List”. She found that the timing of his resignation was so well-organised that by 15 August 2019 Mr Lopez had established an operating website for Imperial describing itself as a wholesaler, commercial flooring supplier, “a partner of Cemimax Australia” and its “number 1 distributor”. Mr Lopez had arranged with Cemimax that Imperial could acquire and market at prices that undercut Evagroup’s cost of goods from Cemimax.

6. Immediately after his resignation Mr Lopez began communicating with Evagroup’s existing customers. By 15 August 2019, Mr Yates became aware that Imperial was offering Cemimax products to Evagroup’s clientele. He had received a number of calls from Evagroup’s customers who asked him whether Mr Lopez still worked with Evagroup.

7. The primary judge explained that Mr Lopez had used the customer list to communicate with Evagroup’s customers after his resignation on numerous occasions through unsolicited emails. Those included an email he sent on 9 September 2019 to tout for business to a number of Evagroup’s customers at their addresses on the customer list (the 9 September email). Most of the 9 September email is set out below but it also included Imperial’s prices for the two most popular Cemimax products:

Dear Customers,

Imperial would love to talk to you about our floor preparation products and how we can help support you in future projects.

Imperial Flooring Australia are priced the best in the market with locations in Sydney and Soon to open Wollongong warehouse in 3 weeks; storing minimum 50,000 bags at one time.

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