BRADFORD TRUST LIMITED AS TRUSTEE OF THE INDUSTRIAL SERVICES TRADING TRUST (T/A INTERCLEAN) V PAUL EDWARD ROEBECK LIMITED AND ORS HC AK CIV 2006-404-007111

BRADFORD TRUST LIMITED AS TRUSTEE OF THE INDUSTRIAL SERVICES TRADING TRUST (T/A INTERCLEAN) V PAUL EDWARD ROEBECK LIMITED AND ORS HC AK CIV 2006-404-007111 7 December 2006IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY CIV 2006-404-007111BETWEEN BRADFORD TRUST LIMITED AS TRUSTEE OF THE INDUSTRIAL SERVICES TRADING TRUST (T/A INTERCLEAN) Plaintiff AND PAUL EDWARD ROEBECK LIMITED First Defendant AND DAVID JOHN PAKIETO Second Defendant AND PC ENVIRONMENTAL LIMITED Third Defendant AND CHRISTOPHER LAURENCE SMITH Fourth Defendant AND PC ENVIRONMENTAL COATINGS LIMITED Fifth Defendant Hearing: 7 December 2006 Appearances: P G Skelton/Ms K Dunn for Plaintiff C F L Godinet for First and Second Defendants J Ropati for Third and Fourth Defendants J Soondram for Fifth Defendant Judgment: 7 December 2006ORAL JUDGMENT OF VENNING JSolicitors: Russell McVeagh, Auckland Gubbs Lawyers, Auckland John Ropati, Auckland Copy to: P G Skelton, Auckland C F L Godinet, Auckland J Soondram, Auckland Kensington Swan, AucklandIntroduction[1] The plaintiff seeks injunctive relief against the defendants. The basis for the plaintiff's claim is the former employment relationship between the plaintiff and the first and second defendants. The plaintiff, Bradford Trust Limited is the sole trustee of Industrial Services Trading Trust (Interclean). Interclean provides industrial cleaning services, including a graffiti management service. [2] The first defendant, Paul Roebeck, was a former employee of Interclean. He was employed from 1 August 2004 to 28 September 2006. The second defendant, David Pakieto, was also employed by Interclean but was dismissed on 22 November 2006. The third defendant, PC Environmental Limited (Environmental) is a company that specialises in cesspit filtration systems and units. The first and second defendants, and the fourth defendant, Christopher Smith, are directors of the third defendant. The fifth defendant PC Environmental Coatings Limited (Coatings) carries on business as a provider of industrial cleaning services including graffiti management. [3] The plaintiff alleges that in breach of their fiduciary duties towards the plaintiff, the first and second defendants, while employees of Interclean, submitted a tender through Environmental and later through Coatings concluded a contract with Fulton Hogan at a price lower than the price submitted by Interclean, to provide graffiti protection services in relation to a project known as the State Highway 20 project. [4] In addition the plaintiff alleges the defendants used the plaintiff's confidential information to create manuals and systems to enable Environmental and later Coatings to satisfy Fulton Hogan and Transit New Zealand that they had the required attributes to be a subcontractor to the project. [5] The plaintiff further alleges the first and second defendants, in breach of their contractual, statutory, fiduciary and equitable duties to Interclean, copied and/orremoved the plaintiff's confidential information for their own or for the third and fifth defendant's use; and used such information to successfully tender for the State Highway 20 Project. [6] The plaintiff says the defendants have also conspired to use confidential information of the plaintiff to promote the business of the third and fifth defendants and further alleges that the third and fifth defendants received confidential information about business opportunities properly belonging to Interclean, knowing they belonged to Interclean and were being disclosed without its consent. [7] The plaintiff sought injunctive relief against the defendants in the initial application made to the Court as follows: a) An injunction restraining the defendants from using or disclosing any of the plaintiff's confidential information; b) Delivery up to the plaintiff's solicitors of confidential information within the possession, power or control of the defendants; c) An injunction restraining the defendants, and each of them, prior to 30 May 2007 soliciting, dealing in trade with, or entering into any contracts with certain customers of the plaintiff; and d) An injunction restraining the first, second and third defendants from fulfilling or continuing to fulfil the contract between Environmental and Fulton Hogan Limited for the provision of graffiti protection services in relation to the State Highway 20 Project. [8] Integral to the plaintiff's claims are its allegations regarding confidential information that the first and second defendants are said to have in their possession and have used or disclosed. [9] The confidential information in issue is set out in the statement of claim at para 22 of Mr Hill, the Managing Director of Interclean's first affidavit. It includes:a) client contact details; b) pricing information (including schedules of Interclean's standard hourly rates for different machines, processes and projects); c) information regarding current and future tenders (including tenders in relation to Transit roading projects); d) information regarding Interclean's pricing in relation to current and future tenders; e) information regarding Interclean's Transit approval of graffiti protection subcontractors; f) information regarding Interclean's internal systems; and g) strategy and planning information. [10] On 20 November 2006 in the absence of affidavits or formal opposition on the part of the defendants Cooper J was satisfied the plaintiff was entitled to the interlocutory relief sought in paragraphs (a), (b) and (c) noted above and made interim orders accordingly. [11] On 28 November 2006 the defendants filed notices of opposition to the application, and the first, second and fourth defendants filed affidavits in support of the opposition. [12] The first defendant denies the plaintiff's allegations. He also denies that he agreed to the terms of a new employment contract presented to him earlier this year. That employment agreement contained a restraint of trade. All defendants deny that the third defendant has a contract with Fulton Hogan for the State Highway 20 graffiti protection work. [13] On 1 December the plaintiff filed affidavits in reply together with a draft amended statement of claim and an amended application for injunction. Theamended statement of claim sought to join the fifth defendant Coatings to the proceeding. The affidavits filed on behalf of the plaintiff in reply confirmed that the fifth defendant, Coatings, won the contract with Fulton Hogan for the State Highway 20 work. In particular there was an affidavit from Mr Dickens, the project manager for Fulton Hogan. He confirms the State Highway 20 contract was let to the fifth defendant on 14 August 2006. The contract was signed on behalf of the fifth defendant by the second defendant Mr Pakieto and was witnessed by the first defendant Mr Roebeck.Application to join the fifth defendant[14] The application to grant leave to file the amended statement of claim joining the fifth defendant was served on the fifth defendant on 1 December 2006. It was not opposed by the third and fourth defendants. Mr Godinet did not have instructions for the first and second defendants on the point. Mr Soondram, who appeared on behalf of the fifth defendant similarly had no instructions. He submitted to the Court that the fifth defendant sought time to consider its position and respond. However, given the information set out in the papers before the Court, particularly the affidavit from Mr Dickens that confirms the contract in relation to the State Highway 20 work was completed on 14 August 2006 on behalf of the fifth defendant by the second and first defendants while they were employed by the plaintiff, I am satisfied the fifth defendant is a proper party to these proceedings and should be joined. For that reason I declined what was in effect Mr Soondram's application for adjournment and granted leave to the plaintiff to file the amended statement of claim joining the fifth defendant.Background[15] The first and second defendants were initially employed by Interclean in July 2004. Environmental was incorporated on 6 April 2005. The directors of Environmental were the first and second defendants and Mr Smith, the fourth defendant. There was a period during 2005 when the second defendant says he was not employed by the plaintiff Interclean but nothing turns on that because it isaccepted that by 2 May 2005 the second defendant was redeployed and was employed by Interclean from then until his dismissal. [16] Mr Roebeck was employed as a sales manager. As from 2 May 2005 Mr Pakieto was the plaintiff's operations manager. In January 2006 Mr Roebeck submitted a price to Fulton Hogan for the State Highway 20 project on behalf of Interclean. [17] In February 2006 Mr Roebeck and Mr Hill renegotiated Mr Roebeck's remuneration package. The purpose, from the plaintiff's point of view was to retain Mr Roebeck as an employee. [18] On 21 April 2006 Mr Hill presented Mr Roebeck with a letter and new employment agreement. The new employment agreement contained a restraint of trade provision for 12 months. There is a dispute between Mr Hill and Mr Roebeck on the affidavit evidence as to whether Mr Roebeck agreed to the terms of the new employment agreement. Certainly it seems the agreement was never executed by him. The plaintiff says that it provided the enhanced remuneration package to Mr Roebeck by, amongst other things, the provision of an upgraded motor car. [19] During February 2006 it seems that Environmental also submitted a price to Fulton Hogan for the State Highway 20 project. On 16 March 2006 Coatings was incorporated. The sole director and shareholder is stated to be a Mr Case. [20] On 14 August 2006 the second defendant signed the subcontract for the State Highway 20 project with Fulton Hogan on behalf of Coatings. The first defendant witnessed the execution. On 4 September 2006 Mr Roebeck gave notice to Interclean that he intended to resign effective 29 September 2006. Mr Hill asked Mr Roebeck to stay on after 28 September to train new sales staff and to continue to service clients. [21] During late September and early October 2006 the plaintiff, through Mr Hill and Mr Singh, made a number of inquiries about the activities of the first and second defendants. The inquiries revealed amongst other things that Mr Roebeck at leasthad presented business cards styled as on behalf of PC Environmental prior to the end of September. The business cards showed that Mr Roebeck held a position with PC Environmental and represented that entity. [22] Mr Roebeck continued to carry out work for Interclean after 29 September 2006. There is a dispute as to whether he was an employee, as the plaintiff says on an agreed hourly rate or, as Mr Roebeck claims, he was a contractor. However he only remained until the end of October. At the end of October Mr Hill requested Mr Roebeck to return Interclean's cellphone. Mr Roebeck returned the cellphone but all the plaintiff's customer contact details had been deleted from it when returned. [23] On 30 October Mr Hill received a text message advising him of Mr Roebeck's new contact details. The text did not advise Mr Roebeck no longer worked for Interclean. That concerned Mr Hill and the plaintiff because if any customers of the plaintiff sought to contact Mr Roebeck on the basis of the message they were put through to Mr Roebeck's new contact which took them to Environmental or Coatings rather than the plaintiff. [24] On 31 October on further inquiry by Mr Hill, Mr Dickens, a project manager for Fulton Hogan advised Mr Hill that tenders had been received from both Interclean and Environmental and that Environmental had won the tender on price. [25] On 6 November the second defendant gave notice to the plaintiff. On 22 November the plaintiff summarily dismissed the second defendant. In the meantime the plaintiff commenced these proceedings on 17 November 2006. [26] The evidence also discloses a number of contacts between the first and second defendants and customers of the plaintiff. On 17 November, the same date the proceedings were issued, Mr Singh met with a representative from Central Joint Venture (CJV), which involves Fletcher Construction and which is one of the plaintiff's biggest customers on the graffiti protection division. Mr Singh deposes that the CJV representative advised him that during the last week in September (when Mr Roebeck finished as sales manager for the plaintiff) he approached her and told her he could do the work Interclean did for CJV at a cheaper price. Mr Roebeckproduced a business card to her for PC Environmental which stated Mr Roebeck held the position as technical manager. I note here that the business cards referred to do not distinguish between PC Environmental Limited and PC Environmental Coatings Limited, simply referring to the business name of PC Environmental. [27] In addition Mr Kenny, a sales representative appointed to replace Mr Roebeck, deposes that a number of clients, including Pacific Steel Limited and Paragon Construction Limited, had been contacted by or had had work done by a company known as PC Environmental. [28] In addition, and also of concern to the plaintiff, Mr Hill's inquiries confirmed that Mr Roebeck had approached TPI Limited, a competitor of the plaintiff with a view to working for that company in some capacity.The plaintiff's case[29] Against that background the plaintiff says that it has an arguable case against the defendants that: a) the first and second defendants in breach of their contractual, statutory, fiduciary and equitable duties owed to the plaintiff, have diverted a valuable business opportunity belonging to the plaintiff, namely the opportunity to secure a subcontract for the State Highway 20 protection work. b) The first and second defendants have used or disclosed the plaintiff's confidential information including the customer contact details to promote and solicit business for PC Environmental. c) The defendants have all conspired together to commit unlawful acts. d) The third, fourth and fifth defendants have been parties to or knowingly assisted in the first and second defendants' breaches of duty.The first and second defendants' cases[30] I turn to the position of the first and second defendants. Counsel for the first and second defendants accepted that there was a serious prima facie case to answer in relation to the breach of fiduciary duty concerning the State Highway 20 contract. That was, with respect, a proper and realistic concession. [31] However, counsel emphasised that the first defendant, Mr Roebeck, had not signed the employment contract presented to him that contained the restraint of trade. While Mr Hill said that the contract had been orally agreed and supported that by reference to the fact Mr Roebeck was given the benefit of the new contractual provisions, it has to be accepted, as it was by Mr Skelton, that matter cannot be resolved on the basis of the current affidavit evidence before the Court. Given what Mr Roebeck and the second defendant were involved in at the time it may perhaps be unlikely that he would agreed to a restraint of trade provision. But in any event the plaintiff does not rely on that employment contract or the restraint of trade to make out the causes of action it raises against the first defendant. [32] Mr Godinet next submitted that the third defendant was not in competition with the plaintiff and that its principal business was that of a supply of cesspit filter solutions. That may be correct to an extent but nevertheless the evidence is that the third defendant was used as a vehicle or front by the first and second defendants when they were dealing with Fulton Hogan before the incorporation of the fifth defendant in mid March 2006. Mr Dickens' evidence is that by February 2006 prices had been submitted on behalf of a number of tenderers including PC Environmental. At that time Coatings had not been incorporated. There is also the additional fact that, as I have noted, there seems to be no distinction made between the entity of PC Environmental Limited and PC Environmental Coatings Limited, at least in terms of the defendant's use of business cards and general trading. More relevantly, perhaps, Mr Roebeck's original contract with the plaintiff defined his role as sales manager in relation to all divisions within the plaintiff. As Mr Skelton submitted that would include the cleaning out of cesspits so there is to that extent an overlap between the nature of the businesses of the third defendant and plaintiff.[33] In relation to the confidential information that the plaintiff sought to protect by injunction Mr Godinet submitted that Mr Roebeck had a number of years experience in the industry and had brought to his employment with the plaintiff knowledge of a number of customers and contacts. He submitted that if an injunction was granted in the terms sought by the plaintiff it would amount to a de facto restraint of trade.The third and fourth defendants[34] For the third and fourth defendants Mr Ropati submitted that the plaintiff had got it wrong when it sued the third and fourth defendants as the Fulton Hogan contract was with the fifth defendant Coatings, not the third defendant Environmental. While I accept that the contract is with Coatings I reject the submission and the thrust of that argument advanced on behalf of the third and fourth defendants that the plaintiff was wrong to join the third and fourth defendants. [35] There is a significant amount of evidence of a relationship between the first and second defendants, the third defendant and the fifth defendant. Mr Smith is also properly before the Court as a director of the third defendant. [36] As I have noted, Mr Dickens' evidence is that by February 2006 Fulton Hogan had received prices by way of tender from amongst other PC Environmental, the third defendant. The fifth defendant was not incorporated by that date. The tender was from the third defendant. At that time both the first and second defendants were directors of the third defendant but were still employed by the plaintiff. The fact the contract was ultimately made between Fulton Hogan and the fifth defendant does not alter that the initial contact or dealing, which was clearly in breach of the fiduciary duty owed by the first and second defendants to the plaintiff, was facilitated through the entity of the third defendant. [37] As Mr Dickens said the first contact he had from Environmental from his records was in July 2006 and he did not pay any particular attention to the change between Environmental and Coatings as he was dealing with the same people.[38] Given that background I cannot accept the further submission made by Mr Ropati for the third defendant that it was not in competition with the plaintiff. When it suited them to, the first and second defendants used the third defendant to compete with the plaintiff. Mr Smith as fourth defendant as a fellow director must have known what was going on. [39] Also and importantly, it appears that Environmental may have been involved in other graffiti protection work in relation to the Greenhithe Bridge and the Hewletts Road Flyover at Mount Maunganui in competition with the plaintiff. That work was referred to in correspondence in July 2006. While the correspondence was under the name of the fifth defendant it is unlikely that the fifth defendant, only having been incorporated in mid March 2006, would have been able to obtain contracts and complete that work within that time period. [40] Further, it has to be said that, despite the fact there has been no cross- examination on the affidavits, on the documentary evidence and the evidence on behalf of the independent third party, Fulton Hogan, there is good reason to doubt the veracity of what is said in the affidavits on behalf of the third defendant. [41] While it is strictly correct that the third defendant did not have a contract with Fulton Hogan as I have noted, certainly the third defendant had dealings with Fulton Hogan in February 2006 or perhaps more correctly, the first and second defendants had dealings with Fulton Hogan at that time using the entity of the third defendant. Yet that was not disclosed by Mr Smith. [42] Next Mr Smith denies that the third defendant owned a car which the plaintiff attributed to it and which it says was used by Mr Roebeck. In response to that denial, in the affidavit in reply Mr Singh has produced a VIR record, which refers to both Coatings as a debtor and Environmental as the owner of the car in question. The position has not been adequately explained by the defendants. Apparently Mr Smith has not disclosed the full picture in relation to that. [43] I conclude that it is at the least strongly arguable that the third defendant is effectively controlled by the first and second defendants with the complicity ofMr Smith the fourth defendant. The third and fourth defendant are properly before the Court and should remain before the Court and be subject to appropriate injunctive relief, given the use to which the third defendant has been put to in the past.The fifth defendant[44] The fifth defendant has the contract with Fulton Hogan. The contract was completed in August 2006 at a time when the first and second defendants were still employed by the plaintiff. It is difficult to imagine a clearer case of breach of fiduciary duty by employees. Further, as noted, there is evidence of the inter- relationship between the fifth defendant and the third defendant in relation to ownership of the car that I have referred to. The fifth defendant is properly also before the Court.Principles[45] The principles to apply to injunctive relief are settled and were agreed by counsel. They have conveniently been summarised by Fisher J in Peters v Collinge[1993] 2 NZLR 554, 556-557:On such applications the Courts do not attempt finally to determine the parties' rights. Instead the Courts customarily traverse a series of questions in turn. The first is whether the plaintiff has established a serious question to be tried. If so, the second is where the balance of convenience lies with particular reference to the adequacy of damages to either party if ultimately successful at trial. The third is whether the result is affected by a series of discretionary considerations including the relative strengths of the parties' cases, any undue delay by the plaintiff, tentative preference for status quo and the conduct of the parties. At the end of the exercise the Court must stand back from those details and ask where the justice of the case lies:Klissers Farmhouse Bakeries Ltd v Harvest Bakeries Ltd [1985] 2 NZLR 129, 142.[46] I turn to consider the causes of action advanced by the plaintiff against that factual background and the submissions made for the party.The breach of fiduciary duty[47] The entry into the contract with Fulton Hogan by the fifth defendant through the actions of the first and second defendants in relation to the State Highway 20 project was a clear breach of the duty of fidelity owed by the first and second defendants to the plaintiff. As employees they owed implied contractual obligations of fidelity. The duty of fidelity continues throughout the employment relationship - even in the employee's spare time as noted in Hivac Ltd v Park Royal Scientific Instruments Limited [1946] Ch 169 at 175 and Schilling v Kidd Garrett Limited[1977] 1 NZLR 243. Reference can also be made to the decision of McKay Electrical (Whangarei) Ltd v Hinton [1996] 1 ERNZ 501 (CA) where an ex- employee was enjoined from carrying out work for a third party after he had tendered for the work during the course of employment in competition with his employer. [48] As submitted for the plaintiff, the law protects an employer in a situation such as this, so that even following employment the ex-employee may continue to be bound by a limited fiduciary duty that survives the termination of employment, not to use knowledge of specific business opportunities acquired in the course of employment to divert business opportunities for their own benefit. I refer to the cases cited by counsel, Canadian Aero Services Limited v O'Malley (1973) 40 DLR (3 rd ) 371 in particular. [49] Although not directors of the plaintiff both first and second defendants were in senior and responsible positions within the plaintiff. They had access to confidential information and importantly business opportunities on behalf of the plaintiff. [50] There is at the last a strong arguable case, which effectively has been conceded by counsel for the first and second defendants, that they took steps to and in fact did divert the business opportunity, namely the State Highway 20 project rather than acting in the best interests of the plaintiff as they were required to as its employees.[51] As I have already referred to, the evidence also establishes the involvement of the third, fourth and fifth defendants in that activity. [52] Apart from the State Highway 20 project there is also an issue as to the other work referred to by Mr Dickens, namely the Greenhithe Bridge and Hewletts Road Flyover contracts. Mr Pakieto referred to the work when negotiating with Fulton Hogan and relied on it as evidence of the defendant's ability to carry out the State Highway 20 contract. [53] There is a serious question to be tried. The State Highway 20 contract is a contract that may run for a number of years and since entry in August 2006 the evidence is that in excess of $67,000 has been paid to the defendants. [54] I find the plaintiff's case under the first cause of action is seriously arguable at the least.Misuse of confidential information[55] The nature of an employee's duty of confidence in relation to information obtained during the course of employment differs according to whether the employee is in the plaintiff's employment or has left. The principles are most helpfully set out in the English Court of Appeal decision of Faccenda Chicken Ltd v Fowler [1986] 1 All ER 617 (CA) at 625 as follows:(1) Where the parties are, or have been, linked by a contract of employment, the obligations of the employee are to be determined by the contract between him and his employer: (2) In the absence of any express term, the obligations of the employee in respect of the use and disclosure of information are the subject of implied terms. (3) While the employee remains in the employment of the employer the obligations are included in the implied term which imposes a duty of good faith or fidelity on the employee. it may be noted: (a) that the extent of the duty of good faith will vary according to the nature of the contract (b) that the duty of good faith will be broken if an employee makes or copies a list of the customers of the employer for use after his employment ends or deliberately memorises such a list, even though, except in special circumstances, there is no general restriction on an ex-employee canvassingor doing business with customers of his former employer: (4) The implied term which imposes an obligation on the employee as to his conduct after the determination of the employment is more restricted in its scope than that which imposes a general duty of good faith. It is clear that the obligation not to use or disclose information may cover secret processes of manufacture such as chemical formulae or designs or special methods of construction and other information which is of a sufficiently high degree of confidentiality as to amount to a trade secret. The obligation does not extend, however, to cover all information which is given to or acquired by the employee while in his employment, and in particular may not cover information which is only "confidential" in the sense that an unauthorised disclosure of such information to a third party while the employment subsisted would be a clear breach of the duty of good faith. (4) In order to determine whether any particular item of information falls within the implied term so as to prevent its use or disclosure by an employee after his employment has ceased, it is necessary to consider all the circumstances of the case. attention must be paid. (a) The nature of the employment (b) The nature of the information itself (c) Whether the employer impressed on the employee the confidentiality of the information (d) Whether the relevant information can be easily isolated from other information which the employee is free to use or disclose.[56] In New Zealand Tipping J in Peninsular Real Estate Ltd v Harris [1992] 2 NZLR 216 (HC) put it this way:There is nothing wrong with an ex-employee, not under restraint of trade, making use of a name or names of his former employer's clients. The malice comes in my view from the ex-employee taking away with him either on paper or in his head, the whole or a material part of his former employer's business records. In my judgment the essential point is this. An ex-employee who, without a list or deliberate memorisation, happens to recall that somebody is a customer or client of his former employer is ordinarily allowed to approach that person to do business in competition with his former employer. What the ex-employee may not do is deliberately to copy, take away or memorise lists of customers or the like to facilitate his competition with his former employer. Genuine unaided memory is one thing; copying either on paper or in the mind lists or other customer data is quite another.[57] In the Faccenda Chicken v Fowler case the Court of Appeal recognised that use of confidential information will be protected post employment if its misuse results in a former employee gaining an unclear advantage in competition with a former employer.[58] It is submitted for the plaintiff in this case that the information in relation to client lists is type 2 information, namely information dishonestly obtained. Counsel refers to the actions of Mr Roebeck in particular deleting customer contacts from the cellphone owned by the plaintiff and then the text message putting customers seeking to ring him on that phone in contact with him at his new employment with the defendants. [59] The potential information sought to be protected in this case is set out in Mr Hill's affidavit and referred to in the statement of claim as:(a) Client contact details; (b) Pricing information; (c) Information regarding current potential business opportunities for Interclean with its existing and potential customers; (d) Information regarding current and future tenders; (e) Information regarding Interclean's pricing in relation to current and future tenders; (f) Information regarding Transit approval of graffiti protection subcontractors; and (g) Information regarding Interclean's internal systems; and (h) Strategy and planning information.[60] Pricing information, business opportunities, tender information and information concerning the work required to put together the information needed to satisfy contractors such as Transit New Zealand or Fulton Hogan as to health and safety systems, are all readily identified as confidential information. [61] The issue of whether the plaintiff is entitled to ongoing protection in relation to client contact details, is perhaps one of the more difficult issues in this case. On the one hand there is, as Mr Godinet submitted, the right of Mr Roebeck to maintain contact with parties he had prior to employment with the plaintiff. The nature of the industry, the type of potential customers, and the ease of access to their details is also relevant. It has to be said that for someone with experience it would not be very difficult to identify potential customers and nor would their contact details be very difficult to obtain once a list had been prepared. On the other hand, the plaintiffseeks protection given that both the first and second defendants have left its operation and have on the face of it breached fiduciary duties to the plaintiff and the plaintiff will need time to put itself in a position to respond fairly to the competition from the defendants. [62] In my judgment the answer lies in a distinction between the customer details and client contact details on the one hand and the other confidential information that I have referred to above on the other. The other confidential information is more clearly the sort of information which belongs to the plaintiff and which the plaintiff is entitled to protection for, even after termination of employment. [63] The answer to the conflict between the position of the defendant's right to compete and the plaintiff's right to protection in relation to customers and client contact details in my view is answered by an injunction for a limited period, in the nature of a springboard injunction as discussed in a number of authorities. [64] The springboard injunction has been approved in a number of cases. It is sufficient for present purposes to refer to the recent decision of BDM Grange Ltd v Parker (HC Auckland, CIV 2005-404-993, 31 March 2005) where at [34] – [35] Priestley J noted:[34] The theme running through these decisions can be broadly summarised as a marked reluctance on the part of the courts to allow a party who in breach of an employment contract or some other fiduciary relationship to profit from that. Those authorities include Schilling v Kidd Garrett Limited [1977] 1 NZLR 243; Satterthwaite & Co Ltd v Gay (1987) 1 NZELC 95, 356; Bradford & Bingley Plc v Holden [2002] EWHC 2445; andPacifica Shipping Co Ltd v Andersen [1986] 2 NZLR 238. [35] These authorities were generically described by Mr Stevens as "springboard"cases. As I understand the principle, which I accept, courts tend to be vigilant in ensuring, where there has been a serious breach of the type I have described, that down-stream benefits do not flow to a party as a result of that party's unlawfulness. This observation additionally applies to an assessment of damages as a remedy, it being very difficult to quantify losses which might flow from departing customers and matters of that sort.[65] I also refer to the following passage from a decision of Lord Cooke inWatson v Dolmark Industries Ltd [1992] 3 NZLR 311: but on the uncontradicted evidence (for the respondents gave none) Dolmark obtained an inequitable advantage or springboard as against potential competitors, including the appellant, enabling it to enter the market with Store 'n Stack earlier than would otherwise have occurred. This was achieved by acting in breach of fiduciary duty in using the appellant's dies for its own purposes and applying the proceeds in developing its new product. Here I consider than an interim injunction to restrain an inequitable springboard advantage would have been appropriate.[66] In the present case the defendants have achieved an unfair advantage over the plaintiff arising directly from a breach of their fiduciary duty in that if not injuncted, they would be able to use the benefits of the breach of that duty to establish their business and would also be able to use the information obtained in breach of the duty to the plaintiff to trade with the plaintiff's customers to the disadvantage of the plaintiff. The plaintiff has through counsel acknowledged the defendants have a right to compete. The issue is when that competition should commence and on what terms the defendants may compete, including what information the defendants may use in competition with the plaintiff. [67] I am satisfied again that the plaintiff has established a serious question to be tried on its claim against the defendants for misuse of confidential information.Unlawful means conspiracy[68] The most relevant authority in relation to unlawful means conspiracy for present purposes is SSC & B Lintas NZ Ltd v Murphy [1986] 2 NZLR 436, 461. I accept on the information before the Court, that there is an arguable prima facie case against all defendants that they have conspired by incorporating companies, namely Environmental and Coatings, in setting up new business contacts to enable them to communicate with each other and with potential clients and that they have been assisted in doing so by the use of confidential information of the plaintiff. It follows that by diverting business opportunities to their entities the defendants are likely to cause loss to the plaintiff. The conspiracy has also been carried out by unlawful means, namely by breach of fiduciary duty and breach of other duties arising out of the employment relationship.Balance of convenience[69] The plaintiff having satisfied the Court that it has arguable causes of action on all heads against the defendants, the next issue is the balance of convenience. Counsel for the defendants did not directly address submissions on that point but in my view the balance of convenience strongly favours the plaintiff. The conduct of the defendants, is as I say, one of the clearer breaches of fiduciary duty that one might come across. The defendants in their affidavit evidence have been, putting it most charitably, coy in the information they have provided to the Court. On another view of it they could be said to have set out to mislead in relation to the position of the contract with Fulton Hogan. [70] Damages would not be an adequate remedy for the plaintiff. Quite apart from the difficulty of quantification as noted by Priestley J in BDM Grange Limitedthere may be an issue as to whether the companies recently established by the defendants would be good for any damages award. [71] The balance of convenience favours the granting of interim relief.Overall justice[72] When I stand back and consider the matter overall in the interests of justice again, given the approach of the defendants to this matter, the interests of justice in my view clearly favour injunctive relief.The nature and extent of relief[73] As I say, the principal issue for the Court is the terms of that injunctive relief. [74] Mr Skelton has submitted that in terms of the springboard injunctive relief the period of time should be for six months ending 30 May 2007, that is six months from the end of November being the close approximation to the end of Mr Pakieto's employment with the plaintiff. To a degree the period is arbitrary. The term of therestraint in the contract was 12 months. In other cases periods of 12 months (inRoger Bullivant Ltd v Ellis [1987] FSR 172) and nine months (in Pacifica Shipping Co Ltd v Andersen [1986] 2 NZLR 328) have been applied. [75] I go back however, to the relevant considerations in this case. They are, the nature of the position held by the defendants with the plaintiff. Next, the nature of the confidential information. Mr Skelton was realistic in conceding that in a period approaching six months in a competitive market pricing information will become dated with time. It may well be less. I am also influenced to a degree by the fact that, as I have said, it seems to me that it would not be difficult for a party even without the benefit of the confidential information to prepare a list of potential customers. I balance against that the point that Mr Skelton has made that the schedule of clients is not all of the potential clients in the market. [76] At the end of the day it is for this Court to fix a period which seems appropriate in the circumstances. Given the nature of this particular industry and the other factors I have referred to I consider a period of four months from the end of November would be an appropriate period for which to provide protection to the plaintiff. Over that period the plaintiff should be able to re-establish contact with its customer through its new employee, who I note is already in place, and to put itself in a position where it would be able to properly and fairly compete with the defendants without imposing an undue restriction on the part of the defendants. [77] I also accept that this is an appropriate case to grant an injunction even though the effect will be to restrain the fifth defendant from fulfilling an existing contract with Fulton Hogan. There is authority for such an injunction in the case ofPSM International Plc & McKenzie PLc v Whitehouse [1992] IRLR 279. It is not so much a case of forcing Fulton Hogan to contract with the plaintiff, or any other party for that matter, but it is a case of enforcing by way of injunction the obligations on the first and second defendants and thereby preventing the fifth defendant from benefiting from the breach of fiduciary duty. [78] I record the plaintiff's undertaking in counsel's letter of 29 November 2006 that, if requested by Fulton Hogan to undertake the contract for the State Highway20 project, the plaintiff will do so in accordance with the existing pricing structure for that work and also that the plaintiff will guarantee continuity of service. It is of course for Fulton Hogan to determine whether it wishes to take up the plaintiff's offer to carry out the work or if it wishes to deal with the matter in another way. A copy of this decision will also go to Fulton Hogan by its solicitors. [79] The result of all of that is that the following injunction orders will apply.Orders[80] There will be an injunction restraining the defendants and/or their agents or servants from using and/or disclosing any of the plaintiff's confidential information as defined in para 24(b) to (h) of the plaintiff's amended statement of claim. [81] There will be an injunction restraining the defendants and/or their agents or servants from using and/or disclosing any of the plaintiff's confidential information as defined in para 24 (a) of the plaintiff's amended statement of claim prior to 31 March 2007. [82] The fifth defendant is to deliver up into the custody of the plaintiff's solicitors any confidential information within their possession, power or control and any copies of such confidential information within three days of service of this order on the fifth defendant. (For the avoidance of doubt I record that there are existing orders relating to the obligation of the first to fourth defendants in relation to confidential information. Those orders remain in force but it is unnecessary for me to repeat them at this time.) [83] There will be an injunction restraining the defendants and each of them at any time prior to 31 March 2007 directly or indirectly through any agent or servants soliciting, dealing in trade with or entering into any contracts with any of the customers of the plaintiff whose names are listed in Schedule 1 attached to the plaintiff's application, except for the sales of cesspit filter solutions.[84] There will be an injunction restraining the defendants and their agents and servants as from 5.00 p.m. 8 December 2006 from fulfilling or continuing to fulfil the contract between the fifth defendant and Fulton Hogan Limited, dated 14 August 2006 for the provision of graffiti protection services in relation to the State Highway 20 project.Costs[85] The plaintiff is entitled to costs having succeeded on this application. There will be an order for costs in the plaintiff's favour against the first to fourth defendants, the fifth defendant effectively being unrepresented. The costs will be on a 2B basis. The first to fourth defendants are jointly and severally liable for the costs together with disbursements as fixed by the Registrar. __________________________ Venning JAddendum[86] The file was listed for a case management conference on 13 December 2006. That date is now vacated. The file will now be reviewed at a conference before Associate Judge Abbott on 28 February 2007 at 4.10 p.m. __________________________ Venning J