GIERA REAL ESTATE LIMITED V SIM AND ANOR HC CHCH CIV-2007-409-000310

GIERA REAL ESTATE LIMITED V SIM AND ANOR HC CHCH CIV-2007-409-000310 20 May 2009IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY CIV-2007-409-000310BETWEEN GIERA REAL ESTATE LIMITED Plaintiff AND CYNTHIA DOLLY SIM First Defendant AND HARVO 4 HOMES LIMITED Second Defendant Hearing: 20 May 2009 Appearances: D Lester and A Sumner for Plaintiff No Appearance for Defendants Judgment: 20 May 2009ORAL JUDGMENT OF HON. JUSTICE FRENCH[1] Although this proceeding was set down for hearing today, there was no appearance of behalf of either the first or second defendant. [2] In the proceeding, the plaintiff seeks final injunctive relief requiring the defendants to deliver up copies of certain copyright works and restraining them from using the works. There is also a claim for damages. [3] The plaintiff relies on three causes of action in relation to the first defendant. (i) Breach of the implied contractual duty of fidelity owed by an employee to an employer. (ii) The equitable obligation of confidence.(iii)Infringement of copyright. [4] In relation to the second defendant, the plaintiff relies on: (i) Breach of copyright. (ii) Knowing receipt of confidential information. (iii)Deliberately interfering with trade by unlawful means. [5] As I have said, although the proceeding was set down for hearing today, the defendants, who filed a statement of defence in 2007, failed to appear. They have taken no steps in the proceeding since advising Chisholm J on 29 April 2008 that they were making progress towards instructing new solicitors, their previous counsel having been granted leave to withdraw. Despite these assurances to the Court, no contact has ever been made by any new solicitors. The fixture notice for today's hearing was sent to the address for service which the defendants provided the Court. [6] In those circumstances, and having reviewed the file, I am satisfied that the matter can properly proceed today by way of formal proof. [7] The plaintiff is a real estate agency trading in Christchurch with a property management division known as Giera Property Management. The first defendant, Cynthia Sim, was employed by Giera as its property manager from April 2006 to 1 January 2007, when she resigned having given notice of termination on 4 December 2006. [8] The second defendant is a company incorporated on 13 November 2006. It carries on the business of property management. The sole shareholder and director of the second defendant is a Mr Grant Harvey. He, too, was employed by Giera, as a sales manager from May 2006 to September 2006. He and the first defendant, Ms Sim, are in a personal relationship. [9] What the plaintiff claims is that the first defendant, prior to leaving the plaintiff's employment, downloaded and copied virtually all (if not all) of theplaintiff's database and computer records and made those records available to the second defendant to assist that company's competition with the plaintiff. As part of what is said to have been a pre-meditated plan, the plaintiff also alleges that Ms Sim encouraged the plaintiff's clients and tenants of properties managed by the plaintiff to use her personal cellphone so that her personal number would become the point of contact. [10] Evidence establishing those allegations has been provided in the form of affidavits from the manager of Giera's property rental division, as well as a forensic computer expert. [11] I am satisfied that the plaintiff has proved the allegations made out in the statement of claim to the requisite standard. In particular, I am satisfied of the following: i) Immediately prior to termination of employment the first defendant copied confidential information from the plaintiff's computer system without the plaintiff's permission. The information that was wrongly copied included: a. the plaintiff's standard forms, management forms, letter templates and standard contracts; b. one of its property management databases ( the Palace Real Base Limited property management database) being a management system containing all information relating to the plaintiff's tenancy management clients, details of tenants and tenancy histories, as well as contact details for tenants and landlords. ii) The plaintiff had copyright in this information. iii) The first defendant gave the information to Mr Harvey of the second defendant. He took possession of it knowing it hadbeen copied without the plaintiff's permission and intending to use it for his own benefit and the benefit of the second defendant. iv) Copying the material without permission was an infringement of the plaintiff's copyright. It also constituted a breach of the first defendant's implied contractual duty of fidelity and was a breach of the equitable obligation of confidence which she owed the plaintiff. v) During her employment in breach of her implied duty of fidelity, the first defendant solicited the plaintiff's clients in order to take away their business from the plaintiff, thereby causing loss. vi) As a result of the first defendant's actions, the plaintiff has suffered loss in the sum of $56,138.32. [12] It follows from all of the above that the plaintiff is clearly entitled to the remedies it seeks. I therefore order that the interim injunctions that were previously granted are to be made final, requiring the defendants to deliver up copies of the copyright works and restraining them from using same. [13] I also enter judgment against the first defendant in the sum of $56,138.32, together with interest at the current Judicature Act rate from the date of filing of the statement of claim until today. [14] Finally, as regards costs and disbursements, I order that the defendants are to be jointly and severally liable in relation to the disbursements sought. These include: i) filing fees ii) New Zealand Forensics costsiii) Avon Investigations – document service iv) Avon Investigations – uplifting documents from Stratford Street [15] As regards legal costs, Mr Lester has asked that the award be on an indemnity basis. [16] In support of that application, he relies on a number of matters, including the deceptive and unethical behaviour of both the defendants, and in particular Ms Sim. [17] In my view, that in itself would not justify an award of indemnity costs. As a matter of principle, indemnity costs must relate to conduct in connection with the litigation as opposed to what happened before the proceeding was issued. In the recent decision of Saunders v Winton Stock Feed [2009] NZCA 148, the Court of Appeal has re-affirmed that indemnity costs should be restricted to cases of flagrant misconduct. [18] I am satisfied that in this case there has, however, been flagrant misconduct. There is evidence, for example, establishing that the first defendant, Ms Sim, deliberately breached the order that was made by Chisholm J on 15 February 2007 in that on the day after she had been served with the order (requiring her not to alter or remove the information) she deleted material from her computer. I accept the submission that there was a conspiracy between the defendants, and that the second defendant must share responsibility for the actions of Ms Sim. There is also the further factor of a history of generally uncooperative conduct by the defendants in relation to these proceedings, particularly after their legal representatives were granted leave to withdraw. [19] In the circumstances, I am satisfied that this is one of those exceptional cases where indemnity costs are appropriate. I accordingly so order.Solicitors: Cameron & Co, Christchurch (Counsel: D Lester)