Misuse of confidential information can be a significant cost to a business and ensuring the business has evidence of misuse is crucial to the success of the claim.
A recent case1 has highlighted the need to ensure that you have evidence to support an allegation that a former employee has misused confidential information.
Facts
One Dream Enterprises Pty Ltd ("One Dream") operates a real estate agency.
- The Defendants were former employees who set up their own real estate agency, 500 Keys Pty Ltd ("500 Keys") in competition to One Dream.
- One Dream lost business to 500 Keys – 14 landlords with 36 properties under management and the sale of a property.
- One Dream brought injunction proceedings in the Supreme Court to restrain 500 Keys from using One Dream's confidential information.
The Court
- There was no evidence that the ex-employees contacted One Dream's clients or misused the confidential information.
- It may have been the new signage for 500 Keys was seen by the landlords who chose to move their business.
- There was a delay in bringing the injunction proceedings of approximately 6 months from when the employees left One Dream.
The Court therefore did not grant the injunction.
Evidence required
In this case the evidence which would have helped One Dream's injunction application (and the ultimate case) is as follows:
- Forensic evidence from computers or telephones of contact lists being downloaded.
- Evidence from current or former clients of One Dream that they had been contacted by the ex-employees.
Lessons
The misuse of confidential information by a former employee is a common concern. If you are concerned about this situation it is important to:
- Gather evidence – this can be forensic evidence from computers or telephones, or from clients who have been contacted by the ex-employees.
- Move quickly – you may wish to consult a lawyer to issue a letter of demand and potentially proceedings.
The cost to your business by the misuse of the confidential information can be significant, so ensuring that you take the right approach from the start is important.
Footnote
1 One Dream Enterprises Pty Ltd v Simmonds & Ors [2019] VSC 304
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances. Madgwicks is a member of Meritas, one of the world's largest law firm alliances.
