FEDERAL COURT OF AUSTRALIA

Coverforce Insurance Broking Pty Ltd v Duthie [2019] FCA 368

ORDERS

THE COURT ORDERS THAT:

1.    The applicants give discovery of all documents falling within the categories of documents listed in annexure “A” to these orders by 8 April 2019.

2.    The respondents give discovery of all documents falling within the categories of documents listed in annexure “B” to these orders by 8 April 2019.

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

ANNEXURE “A”

ANNEXURE “B”

REASONS FOR JUDGMENT

GLEESON J:

1    On 26 February 2019, I ordered the parties to confer in good faith to endeavour to agree on categories of documents for discovery.

2    The parties have reached substantial agreement. However, on each side, there is a disputed category.

3    I am satisfied that there should be discovery by reference to each of these disputed categories for the following reasons.

APPLICANTS’ DISCOVERY

4    The applicants object to giving discovery of:

Documents recording or evidencing or relating to the offer made by Jim Malady to the second respondent in about January 2017 in respect of the second applicant’s portfolio of clients.

5    The applicants (“Coverforce”) allege that the second respondent (“Mr D’Aloia”) breached various contractual and fiduciary duties that he owed to Coverforce by the circumstances in which he left his employment with Coverforce and went to work for the third respondent (“PNO”), a competing insurance broker.

6    At para 36 of the amended statement of claim (“ASOC”), Coverforce alleges that Mr D’Aloia’s employment contract contains an addendum allowing him to retain “ownership” of a specified portfolio of clients following cessation of employment (“Miller portfolio”).

7    At para 36 of the defence to the ASOC, the respondents:

(1)    admit there was an addendum;

(2)    plead certain other matters as to the relevant terms of employment;

(3)    allege that Mr D’Aloia added clients to the “Silvio E portfolio” (which seems to be alleged to comprise part or all of the Miller portfolio”) (para 36(f));

(4)    allege that when Mr D’Aloia commenced employment with Coverforce, he “brought with him the Silvio E clients” (para 36(i));

(5)    allege that after commencing employment with Coverforce, Mr D’Aloia added new clients to the “Silvio E portfolio” (para 36(l)); and

(6)    state that, on 20 January 2017, the second applicant (“Coverforce Victoria”) gave Mr D’Aloia a document referred to as the “Silvio E Offer Memorandum”.

8    I infer that the disputed category of documents refers to the “Silvio E Offer Memorandum”, so that the documents sought are documents recording or evidencing or relating to the “Silvio E Offer Memorandum”.

9    Paragraph 47 of the ASOC alleges, relevantly, that Mr D’Aloia solicited Coverforce’s clients, other than clients in the “Miller portfolio”. Paragraph 47 of the defence pleads relevantly that Mr D’Aloia has only solicited clients which are “Silvio E clients in the Silvio E portfolio”.

10    The respondents contend that there is an issue in the proceeding as to the clients that are the subject of the agreed “ownership”. They submit that Coverforce alleges that Mr D’Aloia “added clients as ‘Silvio E clients’ without authorisation and that such additional clients are outside the scope of those that Mr D’Aloia “owned”.

11    The respondents contend that the documents sought are relevant to the issue of Mr D’Aloia’s authority to add the clients.

12    The ground of Coverforce’s objection is lack of relevance, based on the following propositions:

(1)    Except in para 36 of the defence, there is no reference to the “Silvio E Offer Memorandum” in the defence or cross-claim, and the respondents apparently have the “Silvio E Offer Memorandum”.

(2)    The respondents have not demonstrated the relevance of the category to any matter in issue in the proceeding.

13    On the basis of paras 36(i) and (k) and para 47 of the defence, I accept that Mr D’Aloia has raised the identity of the “Silvio E clients” as an issue in the proceeding.

14    The respondents did not identify where Coverforce alleges that Mr D’Aloia added clients as “Silvio E clients” without authorisation, however, on the basis of their submissions, I am prepared to accept that the issue of the identity of the “Silvio E clients” involves or may involve an issue about Mr D’Aloia’s authority to identify a client as one of the “Silvio E clients”.

15    Although the respondents are not in a position to affirm the relevance of the category of documents to an issue in the proceeding, based on the reference to the “Silvio E book” in the “Silvio E Offer Memorandum”, I accept that documents of the kind sought may be relevant to the identification of the “Silvio E clients”, or Mr D’Aloia’s authority to include one or more clients in that group of clients. In this regard, I note that the respondents contend that they will be required to prove their authority to add clients to the “Silvio E clients”.

16    On its face, the category of documents appears to be confined. In the circumstances set out above, I am satisfied that discovery of this category of documents is likely to facilitate the just resolution of the proceeding as quickly, inexpensively and efficiently as possible: r 20.11 of the Federal Court Rules 2011.

RESPONDENTS’ DISCOVERY

17    The respondents object to giving discovery of:

Documents recording [PNO’s] communications, including through Ms Jane Brockett, with the first and second respondents regarding their engagement with or by [PNO] during the time between October 2016 and April 2017.

18    In support of this category, Coverforce referred to the following matters:

(1)    The first respondent (“Mr Duthie”) and Mr D’Aloia were employed by the applicants between about May 2013 and 27 April 2017.

(2)    Both Mr Duthie and Mr D’Aloia resigned their employment with Coverforce Victoria on 27 April 2017.

(3)    Thereafter, Mr Duthie and Mr D’Aloia commenced employment with PNO.

(4)    Coverforce alleges that Mr Duthie and Mr D’Aloia breached their contracts of employment, including terms that the employee would not during employment and the relevant “restraint period”:

(a)    directly or indirectly approach, canvass, solicit, induce or endeavour to entice away from the employer any employee engaged to work in the employer’s business (see paragraphs 19(b)(i)(A) and 35 of the ASOC);

(b)    accept any approach or proposal, direct or indirect, from any of the employer’s clients to provide services to those clients in competition with the employer (see paragraphs 19(b)(ii) and 35 of the ASOC);

(c)    counsel, procure or otherwise assist any person, firm or corporation to engage in any of the acts summarised in sub-paragraphs (a) or (b) above (see paragraphs 19(b)(v) and 35 of the ASOC); and

(d)    be concerned with, or financially interested in a business, (including as an employee) which is similar to or competes with the employer (see paragraphs 19(b)(vi) and 35 of the ASOC).

(5)    Coverforce’s case includes an allegation that PNO knowingly inducted Mr Duthie and Mr D’Aloia to breach contractual and fiduciary duties they owed to Coverforce.

(6)    In particular, para 27 of the ASOC alleges that, from around December 2016, Mr Duthie was in negotiations with PNO regarding him and Mr D’Aloia commencing employment with PNO, which included discussions about accounts they managed during their employment with Coverforce.

(7)    Ms Brockett was or is an employee of PNO.

19    In the light of these matters, Coverforce contended that the proposed category of documents is “plainly relevant to matters in dispute in the proceeding, in particular whether or not [Mr Duthie] and/or [Mr D’Aloia] breached the contractual duties they owed to Coverforce”.

20    The respondents contended that the proposed category should be “tied to an issue in dispute on the pleadings”. They also contended that the only relevance of documents in the proposed category is in relation to documents which may record or evidence the use or disclosure of Coverforce’s confidential information.

21    In my view, the respondents should be required to give discovery of the proposed category. The dealings between PNO and each of Mr Duthie and Mr D’Aloia while Coverforce employed them is relevant to a core issue raised by the pleadings, namely whether, by those dealings, Mr Duthie and Mr D’Aloia breached their respective contracts of employment.

22    Discovery of the proposed category of documents does not appear to impose an undue burden on the respondents. Accordingly, I am satisfied that discovery of this category of documents is likely to facilitate the just resolution of the proceeding as quickly, inexpensively and efficiently as possible.

CONCLUSION

23    I will make orders requiring discovery of the agreed categories of documents and the two disputed categories.

Associate:

Dated:     15 March 2019