Dec 012016
 

The Story

A SAI Global employee jumped ship to a competitor, Infotrack, taking SAI's data with him on a USB stick. However, the raider lost more than bark in the ensuing court battle.

First, The employer got urgent orders from the court requiring the employee to deliver up devices, computers and documents and to give an affidavit about them by a Compliance Date. The employee did this, admitting what he had done.

Second, in the main case, the employee admitted breach of contract, copyright and s 182 and s 183 Corporations Act.

The employer, SAI Global, won but was only awarded nominal damages of:

(a)  $4,230 – for breach of contract (being 2 weeks salary when the employee worked for a competitor while on gardening leave);

(b)  $1 – for breach of copyright; and

(c)  $5,000 – for flagrant breach of copyright per the s 115(4) of the Copyright Act.

What the Employer Wanted

As is often the case, the legal costs became a big issue.

The employee did everything ordered by the Compliance Date. The employer’s own forensic report confirmed what the employee said about his use of the data. Nonetheless, SAI Global still pursued a full blown case against the employee.

When SAI Global won the case, it asked the court to order that the employee pay all its costs of the litigation. The employee objected.

The Federal Court of Australia Act says that the overarching purpose of the court rules is to facilitate joint resolution of disputes as quickly, inexpensively and efficiently as possible, including resolution at a cost proportionate to the importance and complexity of the dispute.

The court said that the case was not complex, and pursuing the case after the Compliance Date was "objectively unnecessary".

The employer, SAI Global, spent $275,000 on the case. The court said this amount was disproportionate to the importance and complexity of the dispute.

What the Employer Got

The employee was ordered to pay some but not all of SAI Global’s Costs:

(a) Up to the Compliance Date: ($82,000) – costs as assessed (the court calls these party-party costs);

(b) From the Compliance Date: ($158,000) – half of the costs as assessed (ie half the party-party costs); and

(c) Second forensic report: ($34,000) – costs as assessed (ie party-party costs)

Reasonable or party-party costs are assessed by an independent costs assessor. This process could assess the costs at anything from 40% to 100% of that amount.

The upshot was that of $275,000 spent, SAI Global could only recover a proportion of $195,000 as assessed by an independent costs assessor as reasonable. If the recoverable proportion was 60%, SAI Global would have been out of pocket for $160,000. 

The employee would have been out of pocket for his own costs – e.g. $100,000 – plus SAI Global’s assessed costs, e.g. $115,000 – leaving the employee out of pocket for $215,000. 

Peter McNamara says: "The lesson to employees is this: don't take your employer's data, and if you do, get good legal advice. Make sure that you immediately give the employer full disclosure and undertakings to not use the data if so advised. The lesson for employers is this: once you get evidence that your data is secure, pull up stumps, or be ready to wear at least some of the costs of subsequent litigation.”

Read the case here:

SAI Global Property Division Pty Ltd v Johnstone [2016] FCA 1333

http://www.judgments.fedcourt.gov.au/judgments/Judgments/fca/single/2016/2016fca1333

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