FEDERAL COURT OF AUSTRALIA

Energy Action (Australia) Pty Ltd v Ritson [2024] FCA 565

ORDERS

THE COURT ORDERS THAT:

1.    The interlocutory application be dismissed.

2.    The applicant pay the respondent’s costs of the interlocutory application.

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

REASONS FOR JUDGMENT

Delivered ex tempore, revised from transcript

JACKMAN J:

1    The applicant (Energy Action) is an energy broker. Its business involves procuring offers from energy suppliers through an auction system to secure competitive deals for its customers and energy purchasers. The respondent (Mr Ritson) was employed by Energy Action as an account associate from about 24 September 2013 until 20 December 2021. Mr Ritson’s contract of employment contained a confidentiality clause in the following terms in cl 6.2:

You will, both during your employment and so long as the confidential information remains confidential after the termination of your employment (unless it ceases to be a confidential duty or breach of this clause):

(a)    not at any time, either directly or indirectly, disclose or communicate to any person any confidential information that may come to your knowledge during or in the course of the employment, unless expressly authorised by the company or required by law or court order;

(b)    use your best endeavours to prevent disclosure or publication of the confidential information where that disclosure or publication is not authorised by the company;

(c)    if required by law or court order to disclose any confidential information, advise the company of that fact and take all lawful steps to confine disclosure of the confidential information and preserve its confidentiality, including taking steps to allow the company or its agents to do so;

(d)    not use or attempt to use confidential information for your own purposes or for any purposes other than for the purposes of the company or in any manner which may injure or cause loss directly or indirectly to the company and/or its business; and

(e)    acknowledge and agree that, without prejudice to any remedy that the company may have, the company will be entitled to injunctive relief and other equitable relief to prevent or cure any breach or threatened breach of this clause.

2    Clause 12 of the contract defined “Confidential Information” as including:

Information about the following matters that is confidential to the company:

(a)    any client;

(b)    the number, nature or mix of products or services provided by the company;

(c)    any person who the company or you have approached or canvassed during the employment as a potential client, including their names, addresses, requirements and preferences concerning the products or services produced or that may reasonably be provided by or through the company;

(d)    marketing or business plans or strategies;

(e)    techniques, procedures or methods devised by the company or required to be used in the operation of its business, including the training of its personnel.

3    Mr Ritson’s role was to contact potential clients, develop client relationships and expand Energy Action’s client base. Mr MacFarlane, the interim CEO and a director of Energy Action, gives evidence that Mr Ritson’s role involved direct engagement with a large number of existing and prospective clients from the Energy Action database in person, by phone and electronically by email and messages.

4    Mr MacFarlane proves that Mr Ritson had access to contact and account details for Energy Action clients and developed knowledge of these clients’ needs and preferences, and that Mr Ritson had access to client information to manage contracts, including for contract renewals, which is an important time to maintain the client’s custom.

5    Mr MacFarlane also proves that Mr Ritson was trained to use Energy Action’s CRM computer system, which held the Energy Action database and stored client information.

6    On about 4 April 2022, Energy Action became aware that Mr Ritson was then employed as a senior energy consultant by Commercial Connections Australia Pty Ltd trading as Utilizer (Utilizer), a direct competitor of Energy Action.

7    On 19 April 2022, Energy Action’s solicitors sent a letter to Mr Ritson stating that Energy Action had become aware that Mr Ritson had approached one of its customers to solicit its business when its current contract with Energy Action expired. The letter said that Mr Ritson had clearly used the customer’s name, contact details and expiry date of its contract with Energy Action. It appears that the particular customer in question had not been allocated to Mr Ritson when he was an employee of Energy Action. The letter threatened an urgent application for an injunction and requested an undertaking. That was more than two years ago. Mr Ritson did not respond to the letter.

8    On 12 September 2023, Mr Ritson accessed the Energy Action database and computer system. That caused Energy Action to conduct an internal audit log which showed regular and deliberate searches performed on the Auction Platform for Energy Action clients for whom the account manager was formerly Mr Ritson. Mr MacFarlane’s affidavit of 15 March 2024 shows that Mr Ritson accessed Energy Action’s Auction Platform 211 times in 2022 and 583 times in 2023, the last occasion being on 5 September 2023. In September 2023, it appears that Mr Ritson contacted at least five customers of Energy Action. That was more than eight months ago.

9    On 2 November 2023, Energy Action commenced these proceedings alleging breach of the confidentiality clause of Mr Ritson’s employment contract and contravention of s 183 of the Corporations Act 2001 (Cth). I made directions for the case management of the proceedings in chambers. I note that the action was commenced more than six months ago.

10    The matter came before me on 7 March 2024. On that occasion, Energy Action sought a date for an interlocutory injunction, despite agreeing with my proposition that a final injunction on the question of liability and injunctions would not take any longer than the half day or so estimated for the interlocutory injunction application. Energy Action then declined my offer of dates in April on the ground of unavailability of counsel, with the matter fixed for today to suit the convenience of counsel. In sum, Energy Action was content to let another two and a half months go by without a hearing of its interlocutory injunction application.

11    The orders sought today by way of interlocutory relief are that the respondent:

(1)    be restrained until the hearing and determination of this proceeding or until further order from, whether by himself, his agent/s howsoever, from disclosing, copying, or using Confidential Information or allowing so much of that as is in his power, possession or control to be disclosed, copied or used (noting that Confidential Information for the purpose of the relief sought is as defined in the employment contract at cl 12).

(2)    deliver up to the Court by 5.00 pm, within 28 days of the date of the orders, all documents, files or written materials, whether in hard copy or electronic form, in his possession, custody or control, which, in the period from 1 January 2021 until the date of the orders:

(a)    were obtained or accessed by the respondent in the course of, or as incidental to, his employment with the applicant;

(b)    were downloaded from (or otherwise accessed) using the applicant’s computer systems, email or server;

(c)    were obtained by emails, including attachments to emails; and

(d)    contain or refer to information about the applicant’s business, and its clients and/or customers, which the respondent acquired during, or is incidental to, his employment with the applicant; and

(3)    serve on the applicant an affidavit to the best of the respondent’s knowledge and belief, particulars of:

(a)    any document downloaded from or otherwise accessed using the applicant’s computer or server system by the respondent in the period from 20 December 2021 to the date of these orders; and

(b)    all Confidential Information downloaded from, or otherwise accessed using, the applicant’s computer or server system by the respondent in the period from 20 December 2021 to the date of the order;

in the respondent’s possession, custody or control at any time on or after 21 December 2021 and, in respect of such information:

(c)    when and how it came into the respondent’s possession, custody or control;

(d)    each person to whom it or any of it has been provided or otherwise communicated;

(e)    the date, time and means of every communication referred to in (d);

(f)    the identity and location of every electronic device on which any such information has ever been stored; and

(g)    where any such information is currently stored or kept in any form.

12    The applicant also seeks interlocutory orders granting it access to any documents produced by the respondent in answer to order (2).

13    The respondent does not appear to dispute that there is a serious question to be tried, but disputes that the balance of convenience favours an interlocutory injunction. Mr Ritson relies on an affidavit which he made on 5 March 2024. That affidavit states that the potential pool for energy brokerage companies is relatively limited and that it is Mr Ritson’s experience that all of the energy brokerage companies end up storing essentially the same information about the same pool of clients and potential clients, and adds that that was also his experience when he was working for Energy Action.

14    Mr Ritson also states that Utilizer has a significant client database which it has built up over time and that most, if not all, of the plaintiff’s clients were already stored in the Utilizer client database when he started working with Utilizer. There is no evidence by Mr MacFarlane or anyone else on behalf of Energy Action controverting that evidence, despite the fact that Mr MacFarlane made a later affidavit on 15 March 2024. In those circumstances, I am not persuaded that it is appropriate to grant an interlocutory injunction which would restrain Mr Ritson from using customers’ names or contact details.

15    It is clear that Mr Ritson accessed the Auction Platform on a very large number of occasions in 2022 and 2023, the last such occasion apparently being on 5 September 2023. Mr MacFarlane gives evidence in his affidavit of 15 March 2024 as to the Auction Platform, in the following terms:

(a)    The Auction Platform allows clients of Energy Action and their Energy Action brokers to see offers to supply energy for the specific clients’ needs. The Auction Platform is a closed bidding system which is not publicly viewable or accessible;

(b)    Within this closed Auction Platform, energy providers with underlying supply agreements with Energy Action (Suppliers) make offers on a competitive basis. The Auction Platform assists in choosing the most favourable offer for the client, without the client needing to engage with multiple providers or to show publicly their service needs;

(c)    The Auction Platform allows Energy Action clients and brokers to read and compare different prices of potential contracts with energy suppliers. The pricing information of energy suppliers is only available for a limited time. The pricing information is confidential, not publicly available, or available to Energy Action’s competitors from the Auction Platform; and

(d)    As such, the Auction Platform contains specific information, including the particular offers made to the client by energy providers whose rates have been negotiated with Energy Action, the contract terms, and the contract requirements provided by the client. This information is confidentially provided to Energy Action for use in the Auction Platform to broker contracts between energy providers and Energy Action clients. This information is not publicly available to any other party.

16    I am satisfied that there is a substantial amount of genuinely confidential information on the Auction Platform. However, Energy Action accepts that since September 2023, Mr Ritson has been unable to access the Auction Platform. Further, there is no evidence that any information which Mr Ritson may have accessed in or before September 2023 is of any continuing utility or confidentiality. For all I know, the information is now either stale or known publicly beyond the confines of Energy Action and the particular client. In circumstances where Mr Ritson is unable to access the Auction Platform, Energy Action has not sought an injunction which is confined to restraining Mr Ritson from accessing the Auction Platform.

17    The delay in the present case is very substantial, going back more than two years, and I regard that as a factor in the circumstances of this case as indicating that any problem which Energy Action faces arising out of the circumstances is not so great as to have warranted an urgent application for the injunctions which it is seeking.

18    In addition, there are difficulties with the form of orders sought. Energy Action maintained the form of the orders sought, even after I raised the difficulties with their counsel.

19    Order 1 and order 3(b) are tied to the contractual definition of “Confidential Information”, which is properly confined to information which is genuinely confidential to Energy Action. However, it would be very difficult, if not impossible, for Mr Ritson to know (under pain of contempt for breaching the injunction) what is truly confidential now to Energy Action. For example, Energy Action maintains that the names and contact details of its customers remain confidential information of Energy Action, despite the uncontroverted evidence of Mr Ritson that they were known to Utilizer in any event by reason of its own work. I regard it as undesirable to grant any injunction cast in terms which will inevitably lead to future disputation and would require of Mr Ritson very extensive inquiries of personnel within Utilizer and also other competitors to ascertain whether they too are aware of the contact names and details of particular customers.

20    Orders 2 and 3(a) are not even confined to information which is confidential to or created by Energy Action, and would include a restraint on Mr Ritson using any information which he came by during his employment with Energy Action. Such orders are cast in grossly excessive terms.

21    In all the circumstances of the case, I am not persuaded that the balance of convenience favours the grant of the orders which have been sought by Energy Action. Accordingly, the orders of the Court are as follows:

(1)    The interlocutory application be dismissed.

(2)    The applicant pay the respondent’s costs of the interlocutory application.

Associate:

Dated:    27 May 2024