National recruitment firm Building Careers Australia was on shaky ground in its legal action against former state director Lezly D’Limi, the Supreme Court has found.
BCA applied to the court to enforce a restraint of trade against Ms D’Limi and her private company, Oceania Nominees.
That was after Ms D’Limi left BCA in July to establish her own business, which trades as Tailored Resources.
She had been with BCA for nearly two years, initially as state manager and then as regional director.
BCA has already obtained interim orders requiring Ms D’Limi to destroy all copies of a spreadsheet she downloaded with information about BCA’s clients.
Ms D’Limi told the court she downloaded the database for legitimate business reasons and never misused the information.
The court was also assessing whether Oceania Nominees should be restrained from competing with BCA.
Master Craig Sanderson ruled last month that he would not grant the restraint sought by BCA.
In a ruling published on Friday, Master Sanderson detailed his reasons.
He said the matter was complicated by the uncertain contractual relationship between the parties.
Ms D’Limi initially joined BCA as an employee but after a short while she was engaged as a contractor through Oceania Nominees.
BCA, which was represented by law firm Solomon Brothers, argued Oceania was covered by agreements its director Niall Conlon negotiated with Ms D’Limi.
Mr Conlon told the court that he handed a ‘contractor agreement’ to Ms D’Limi in Sydney in April last year and planned to follow up with a soft copy, but admitted he could not find any record of having sent the document.
Ms D’Limi denied the discussions detailed by Mr Conlon ever took place.
“She says she never saw, let along signed, a contract or agreement,” the judgement stated.
Ms D’Limi essentially argued she was employed on a contractual basis that did not include any formal agreement.
Master Sanderson made clear that BCA had a tough case to prove.
“The plaintiff is on shaky ground,” he stated.
“The uncertainty surrounding the contract provision provides a serious impediment to the plaintiff’s application.”
Master Sanderson observed that “clearly there was some form of contract between the plaintiff and Oceania”.
“It is just a matter of determining the terms and conditions of that contract,” he added.
“When the plaintiff's difficulties in establishing the contract position are aggregated, it is clear the plaintiff has real difficulties.”
Master Sanderson said that, when the matter went to trial, the outcome (regarding contract provisions) would likely depend on the credibility of witnesses.
In the interim, he granted a limited injunction in favour of BCA after acknowledging its legitimate concerns regarding use of its database.
“The database lies at the heart of their business,” he stated.
“To have it compromised by any party making use of the information could cause the plaintiff's business irreparable damage.
“In light of the first defendant's admission she downloaded the database I think it is appropriate a restraint on use of any information in that database be maintained until trial.
“Given my earlier order, any copies of the database – electronic or physical – ought by now have been destroyed.
“But I am satisfied it is proper and appropriate an injunction be issued restraining use of any confidential information pending trial.”
However, Master Sanderson stopped short of imposing a restraint on Ms D’Limi’s company.
“Given the limited restraints on the first defendant (confined to use of confidential material) there seems to me to be no real point in issuing an injunction,” he concluded.
“While I am satisfied there is a serious question to be tried in relation to any restraint of trade applicable to Oceania, I am not satisfied the balance of convenience favours the grant of an injunction.”