05 Jun Breach of Confidence: Approach with Caution
If recent cases are anything to go by, unless an employer can point to real loss or damage from an employee misusing its confidential information, the Courts aren’t inclined to entertain such claims on ‘modest principle’.
Take the Victorian case of Actrol Parts Pty Ltd v Coppi (No 3)  VSC 758. Actrol Parts Pty Ltd (“Actrol”) sued its former employee Mr Coppi for allegedly emailing client lists and internal sales records to his personal email in the weeks leading up to his resignation. Actrol maintained that the client lists and internal sales records contained confidential information of Actrol.
Mr Coppi alleged that he sent the emails so he could work remotely from home and that he deleted them all after their use. He denied forwarding them to any third parties (including his competitor prospective employer). A forensic inspection of all of Mr Coppi’s electronic devices as sought by Actrol found no wrongdoing on the part of Mr Coppi. Having exhausted discovery and the processes of inspection of the devices, Actrol continued to press the case to trial.
At the trial, Actrol sought only nominal damages since Actrol couldn’t point to any actual loss or damage from Mr Coppi’s actions. It was a weak position, and it didn’t hold up well.
Ultimately, Justice Bell determined the case and found that:
- the forensic inspection had turned up nothing;
- Mr Coppi had a legitimate reason for emailing the confidential information to himself;
- Actrol was only seeking nominal damages and so could not be awarded costs;
- Mr Coppi had breached his employment contract by starting another job the day before notice period ended;
- The case was an “entirely pyrrhic victory” – i.e., one that came at a great cost.
Pyrrhic it certainly was in the end, but not a victory. Not only did the judge dismiss the case – he found that, by taking it to court, Actrol had actually breached its obligations under the Civil Procedure Act 2010. As a consequence, the judge awarded the costs of the entire proceeding to Mr Coppi.
All of this shows that breach of confidence claims are particularly tricky to prove and to be advanced with great caution. Pre-emptive measures to protect confidential information are a far more practical option for employers. Also, employers should at least try to remedy a situation concerning a misuse of confidential information, where possible, prior to commencing litigation.
We can assist both employers and employees in disputes concerning confidentiality and breach of confidence. Please contact us on (03) 9670 5000.
This article was written by Litigation Senior Associate, Alex Di Blasi.
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