Luvalot Clothing Pty Ltd v Dong

• Jurisdiction: Australia Federal only
• Court: Federal Court (Australia)
• Judgment Date: 28 November 2022
• Neutral Citation: [2022] FCA 1411
• Date: 28 November 2022

FEDERAL COURT OF AUSTRALIA

Luvalot Clothing Pty Ltd v Dong [2022] FCA 1411

File number:	VID 12 of 2018
Judgment of:	ANDERSON J
Date of judgment:	28 November 2022
Catchwords:	EQUITY – confidential information – use of confidential information subject to claimed equitable obligation – whether employee breached equitable obligation of confidence – whether the applicant’s customer details list has necessary degree of confidence – where WeChat contacts maintained on employee’s personal mobile phone – whether use of confidential information in breach of contract – application dismissed ; CORPORATIONS – application under s 183 of the Corporations Act 2001 (Cth) – former employee – duty not to misuse information – whether former employee was in breach of this duty – restraint of trade clause – reasonableness of restraint – restraint on acting for potential competitor – application dismissed
Legislation:	Corporations Act 2001 (Cth) Restraints of Trade Act 1976 (NSW)
Cases cited:	Advanced Fuels Technology Pty Ltd v Blythe & Ors [2018] VSC 286 Ansell Rubber Co Pty Ltd v Allied Rubber Industries Pty Ltd [1967] VR 37 Belflora Pty Ltd v Vinflora Pty Ltd [2021] NSWCA 178 Cactus Imaging Pty Ltd v Peters (2006) 71 NSWLR 9 Coco v AM Clark (Engineers) Ltd [1969] RPC Coles Supermarkets Australia Pty Ltd v FKP Limited [2008] FCA 1915 DC Payments Pty Ltd v Next Payments Pty Ltd (2016) 51 VR 151; [2016] VSC 315 De Belin v Australian Rugby League Commission Limited [2019] FCA 688 Del Casale v Artedomus (Aust) Pty Ltd [2007] NSWCA 172; (2007) 165 IR 148 Faccenda Chicken Ltd v Fowler [1987] Ch 117 Findex Group Limited v McKay [2020] FCAFC 182 Gold Titan Pty Ltd v Lopez [2021] FCA 918 Industrial Rollformers Pty Ltd v Ingersoll-Rand (Australia) Ltd [2001] NSWCA 111 John Fairfax Publications Pty Ltd v Birt [2006] NSWSC 995 Just Group Limited v Peck (2016) 344 ALR 162 Liberty Financial Pty Ltd v Jugovic [2021] FCA 607 Lindner v Murdock’s Garage (1950) 83 CLR 628 Nordenfelt v Maxim Nordenfelt Guns and Ammunition Company Ltd [1894] AC 535 Optus Networks Pty Ltd v Telstra Corporation Ltd [2010] FCAFC 21; 265 ALR 281 Plus One International Pty Ltd v Ching (No 3) [2020] NSWSC 1598 Robb v Green [1895] 2 QB 315 Saltman Engineering Co Ltd v Campbell Engineering Co (1948) 65 RPC 203 Saltman Engineering Co Ltd v Campbell Engineering Co Ltd [1963] 3 All ER 413 Streetscape Projects (Australia) Pty Ltd v City of Sydney [2013] NSWCA 2; (2013) 295 ALR 760 Weldon & Co Services v Harbinson [2000] NSWSC 272 Woolworths Ltd v Olson [2004] NSWCA 372 Zomojo Pty Ltd v Hurd (No 2) [2012] FCA 1458; 299 ALR 621
Division:	General Division
Registry:	Victoria
National Practice Area:	Commercial and Corporations
Sub-area:	Commercial Contracts, Banking, Finance and Insurance
Number of paragraphs:	248
Date of hearing:	26-27 September 2022 and 3 October 2022
Counsel for the Applicant:	Mr A Sykes
Solicitor for the Applicant:	Actuate IP
Counsel for the Respondent:	Mr D K Shirrefs
Solicitor for the Respondent:	Gorval Lynch

ORDERS

		VID 12 of 2018
BETWEEN:	LUVALOT CLOTHING PTY LTD Applicant
AND:	LU DONG Respondent

order made by:	ANDERSON J
DATE OF ORDER:	28 November 2022

THE COURT ORDERS THAT:

1. The proceeding be dismissed.

2. The Applicant pay the Respondent’s costs.

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 Applicant (Luvalot), by an originating application filed 9 January 2018 and an amended statement of claim filed 18 September 2019 (ASOC), seeks relief against the Respondent (Ms Dong), a former sales assistant employed by Luvalot, for alleged breaches of her contract of employment, misuse of Luvalot’s confidential information and for alleged breaches of s 183 of the Corporations Act 2001 (Cth) (Act).

THE PLEADED CASE

2 Luvalot, by its ASOC, alleges that:

(a) Ms Dong was employed by Luvalot pursuant to a contract of employment which included terms that Ms Dong would not misuse Luvalot’s confidential information while employed by Luvalot and after termination of her employment;

(b) both before and after termination, Ms Dong would not improperly use confidential information she acquired by reason of her employment with Luvalot to gain an advantage for herself or someone else, or cause detriment to Luvalot;

(c) Ms Dong was only eligible to use Luvalot’s confidential information solely for the purpose of performing her duties owed to Luvalot;

(d) on termination, Ms Dong was required to return to Luvalot all confidential information in material form in her possession or control, and all records based on her incorporating confidential information in her possession or control, which included client contact lists and databases;

(e) for alternate periods of two years, one year, or six months following the termination of her employment, Ms Dong was prohibited from, in the alternate areas of Australia, New South Wales, or Sydney; to solicit, canvass, approach or accept any approach from any person or organisation at any time during the 12 months prior to Ms Dong’s employment ending, a client or customer of, a supplier or contractor to, or investor in Luvalot;

(f) Ms Dong was required to provide four weeks written notice to terminate her employment with Luvalot;

(g) Ms Dong commenced employment with Luvalot in accordance with the terms of the contract of employment on 31 July 2012;

(h) Ms Dong provided written notice purporting to resign from her employment with Luvalot on 11 January 2017, but then purported to resign immediately, without giving four weeks’ notice as required by the contract of employment;

(i) in accordance with the terms of the contract of employment, the effective date at which Ms Dong’s employment with Luvalot ceased was 7 February 2017;

(j) as a consequence of Ms Dong’s employment with Luvalot, there was a statutory duty cast upon Ms Dong that she would, before and after the termination of her employment, not improperly use confidential information she acquired by reason of her employment with Luvalot to gain an advantage for herself or someone else; or cause detriment to Luvalot;

(k) Ms Dong’s duties as a sales assistant with Luvalot included communicating with customers in relation to potential sales; encouraging and promoting such potential sales; and using and maintaining a list of existing customer contact details in order to fulfil her other duties (Customer Details List);

(l) the Customer Details List was, amongst other places, maintained and duplicated in part on Ms Dong’s personal mobile phone;

(m) the Customer Details List consisted of existing customer names of Luvalot that had made wholesale purchases from Luvalot in the past and their phone numbers;

(n) the combined information in the Customer Details List of the persons and organisations that were existing customers of Luvalot that had made wholesale purchases in the past and their contact information, including phone numbers, was at all relevant times information that was confidential to Luvalot and not in the public domain;

(o) the Customer Details List was at all relevant times confidential information belonging to Luvalot;

(p) on and...