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PropertyIQ NZ Limited v Vicelich [2012] NZHC 2640 (11 October 2012)

Last Updated: 30 October 2012

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2012-404-003693 [2012] NZHC 2640

BETWEEN PROPERTYIQ NZ LIMITED Plaintiff

AND CARMEN VICELICH First Defendant

AND DATA INSIGHT LIMITED Second Defendant

Hearing: 6 August 2012;

12 and 21 September 2012 (On the Papers

(Plaintiff's Submissions)); and

17 and 24 September 2012 (On the Papers) Defendant's Submissions))

Counsel: A V Foote for the Plaintiff

R S Teirney for the Defendants (6 August 2012)

E St John for the Defendants (17 September 2012) Judgment: 11 October 2012

JUDGMENT OF DUFFY J [Re Merits]

This judgment was delivered by Justice Duffy on 11 October 2012 at 2.00 pm, pursuant to

r 11.5 of the High Court Rules

Registrar/Deputy Registrar

Date:

Counsel: E St John P O Box 105270 Auckland 1143 for the Defendants

_{Solicitors: Duncan Cotterill P O Box 5 Christchurch 8140 for the Plaintiff}

PROPERTYIQ NZ LTD v VICELICH and ANOR HC AK CIV-2012-404-003693 [11 October 2012]

[1] The plaintiff, PropertyIQ NZ Limited (PropertyIQ), alleges that the defendants have unlawfully acquired and are going to misuse its confidential information. It seeks interim orders of broad effect against them to protect the confidential character of the information and to restrain the defendants from dealing with the information in a way that would benefit them. The defendants deny that they have come into possession of PropertyIQ’s confidential information, let alone that they might misuse it. At present, there are interim orders in place to protect the subject information, pending the disposal of PropertyIQ’s application.

[2] The application to this Court raised jurisdictional issues, as well as the usual issues regarding the merits of an application for interim injunctive relief. On

13 August 2012, I delivered an interim judgment (PropertyIQ NZ Ltd v Vicelich and Anor HC Auckland CIV-2012-404-3693, 13 August 2012) in which I found that this Court has jurisdiction to determine PropertyIQ’s claim. The parties were then given further time to file additional submissions on the merits of PropertyIQ’s application for interim relief. Having received and considered those submissions, I now deliver judgment on the outstanding issues.

Background facts

[3] PropertyIQ provides property and land information, as well as other services regarding these subjects, to clients who include central and local government, other public bodies, corporate entities, banking, financial and insurance services, property professionals, property investors, homebuyers and sellers in New Zealand. Its shareholding is held by Quotable Value Limited (Quotable Value), which is a state owned enterprise that carries on the business of land valuation in New Zealand, and RP Data Limited (RP Data), which is the largest supplier of property information and analytic services in Australia. The range of services that PropertyIQ provides includes risk management of property financing and insurance. As part of its work, it collates and manages “big data”. This is a term that PropertyIQ uses to refer to computerised information (obtained from multiple sources) that its computer systems use to search for causative and correlative relationships that are not readily perceived by human actors. These electronic analyses enable PropertyIQ to make predictive assessments of potential risk and other potential consequences for its clients. Thus,

PropertyIQ places a very high value on the information it collates from its many sources and the electronic information systems that it possesses to manage the use of such information. The collection and retention of this information, as well as the computerised systems for managing its application, are unique to PropertyIQ. The company contends that these have the required characteristics of confidentiality for a breach of confidence claim and that Ms Vicelich could only have had access to this information and its uses through her position first as an employee and later as a contractor of PropertyIQ.

[4] Ms Vicelich was employed in senior positions in Quotable Value from 2002 to 2008 when she moved to PropertyIQ, which was then operating under its former name of RPNZ Limited. She was responsible for client management of banks, finance and insurance companies. At the time of her resignation from PropertyIQ in April 2012, she was employed in the senior position of account director and was one of the company’s highest paid employees. This role brought her into close contact with PropertyIQ’s clients, its valuable information databases and electronic information systems. Data Insight Ltd (Data Insight) is a registered company in which Ms Vicelich has an interest; she is the sole director and she and her husband are the only shareholders. PropertyIQ suspects that Data Insight has been formed to operate a business in competition with PropertyIQ, and that its confidential information will be used unlawfully to advance the interests of Data Insight and Ms Vicelich.

[5] The express terms of Ms Vicelich’s employment were that she would act in the best interests of PropertyIQ and refrain from committing any act or omission that might detrimentally affect the goodwill and reputation of PropertyIQ. She was not to directly or indirectly engage in any business or undertake other work activity or appointment, or do anything likely to conflict with or adversely affect the performance of her duties with PropertyIQ. She was responsible for the security of any confidential and commercially sensitive information under her control or to which she had access. The confidential information included information about PropertyIQ’s clients, customers and suppliers, as well as all information, data, know- how (whether technical or not) regarding specific business opportunities. She was required not to disclose or discuss this information with other people except in the

proper performance of her duties and responsibilities. She also agreed that she would not disclose or reveal to any new employer or any other party, or use in any way for her own purposes any confidential information records or other material learned by her or disclosed by her during her employment. The contract also included a restraint of trade clause, which provided that for a period of three months following termination, she was not to attempt or solicit or endeavour to entice away from PropertyIQ any of its New Zealand clients, suppliers, customers and staff with whom she had dealt or whose trade and circumstances she was aware of.

[6] PropertyIQ says that in her role of account director, Ms Vicelich managed and sold PropertyIQ’s range of products, services and data solutions to meet banks’ needs around risk, fraud, mortgage lending, customer acquisition and retention, and for insurance clients, customer intelligence and risk mitigation. She also worked with those clients to identify new or changing requirements and to provide solutions to address those. She was the only account manager at PropertyIQ with a dedicated responsibility for banking and insurance sector clients. Consequently, she formed relationships at senior levels with key clients in those industries.

[7] PropertyIQ says that Ms Vicelich’s role gave her access to its highly confidential and sensitive information and intellectual property, including its analytical models, product pricing, customer contracts, marketing strategies and other client information and data, product development, ideas and core strategic and planning material. The information she had access to was restricted to a limited number of specified persons within PropertyIQ’s senior management team. One of her recent responsibilities was being PropertyIQ’s key representative managing its response to the Christchurch earthquake, including liaison with the Earthquake Commission, the Canterbury Earthquake Recovery Authority (CERA), Tonkin and Taylor, banks insurers and re-insurers. PropertyIQ says that its data and analytic services have been an important component to helping those parties in their decision-making on the issues arising from the Christchurch earthquake.

[8] Ms Vicelich resigned from PropertyIQ on 12 April 2012, giving one month’s notice. Ms Vicelich informed PropertyIQ that she considered that after 10 years working with it and its shareholder, Quotable Value, she had decided it was time for

her to move on, and that she planned to set up her own business, which would be a niche consultancy business advising clients on data, strategy and best practice around data management. She said she would be independent of data suppliers and would provide clients with recommendations on data sources that were best for their purposes. She described her primary focus as being around marketing data and strategy. She said she was interested in working with PropertyIQ as an on-seller of its data solutions and said she saw her business as being complementary to PropertyIQ’s.

[9] There was some discussion between PropertyIQ and Ms Vicelich about her continuing to do work for PropertyIQ for a three month period to assist with a hand- over of her role within the company to a new person. Although there was discussion about Ms Vicelich working for a three month period on contract, ultimately, no agreement was reached on the terms and conditions, and as the termination date of her employment approached, it was agreed that she would stay on for a week following termination on an interim contract while discussions regarding a longer contractual period continued. It was during the contractual negotiations that PropertyIQ became concerned that Ms Vicelich’s business plans, rather than being complementary to the work carried on by PropertyIQ, might in fact cause her to compete with the company for work.

[10] In March 2012, Nigel Jefferies, the chief executive of PropertyIQ, learned from the chief executive of RP Data in Australia that there was a rumour circulating in Australia that Louis Psaroulis, whose business had been purchased by RP Data some years earlier, was going to set up a business to compete with RP Data in Australia, using that company’s intellectual property, and was working with Ms Vicelich in a business that would compete with PropertyIQ in New Zealand. At that time, there had been no indication from Ms Vicelich that she was intending to leave PropertyIQ. As Mr Jefferies was aware of this rumour, at a farewell function for Ms Vicelich on 9 May 2012, he asked her if she had heard from Mr Psaroulis. Mr Jefferies’ evidence is that Ms Vicelich said she had not heard from him for about a year and that she did not know what he was doing. Mr Jefferies says that this would have been incorrect, as he is now aware of email communications between Ms Vicelich and Mr Psaroulis that show they had been in regular contact with each

other via email since July 2011 and that they had met in person in March and May

2012. Indeed, in his affidavit evidence, Mr Jefferies refers to an email that Ms Vicelich had sent to Mr Psaroulis earlier on the very day of the function when she had given every indication to Mr Jefferies that she had been out of contact with Mr Psaroulis for about a year.

[11] On 10 May 2012, a work colleague of Ms Vicelich, Paul Johnstone, spoke to a research director of PropertyIQ advising him that Ms Vicelich had for some time been planning a competing business targeting banking and insurance companies and aiming at the higher margin products. Mr Johnstone said that Ms Vicelich was working with Mr Psaroulis and another person, who was a supplier and contractor of PropertyIQ. Mr Johnstone had come by this information because initially he had been invited to join with Ms Vicelich and Mr Psaroulis in the new venture but, ultimately, Mr Johnstone decided against this. He then began to provide information to PropertyIQ regarding the plans of this group.

[12] PropertyIQ’s suspicions became aroused and, accordingly, it took further steps to investigate what Ms Vicelich’s intentions might be once she ceased working for PropertyIQ. Investigations were made of PropertyIQ’s computer system. The company opened her “Outlook Calendar” on her work computer and discovered that on the following day, 11 May 2012, she had scheduled a private meeting and the proposed attendees were Mr Psaroulis, Graham Sergent, Curtis Brazier (from Property Profiles) and Antony Vicelich. Another electronic calendar (“Google Calendar”) indicated that Ms Vicelich had arranged an appointment for dinner with Mr Psaroulis, Mr Sergent and Mr Brazier on the evening of 10 May

2012.

[13] On 11 May 2012, Mr Johnstone met with PropertyIQ personnel and advised them that, amongst other things, PropertyIQ’s confidential information was at risk from being appropriated by Ms Vicelich. Consequently, PropertyIQ ordered a check of its computer systems, particularly of the email communications made by Ms Vicelich. This showed that she had been sending numerous emails (in excess of

100) from her work computer to her home address between January to May 2012.

She had also deleted this traffic from her “sent items” and “deleted items” folders in

her email system. The suspect email traffic was only discovered after PropertyIQ conducted searches of its back-up archive system, which does not allow this type of removal activity.

[14] Later, on 21 May 2012, Mr Jefferies became aware that Ms Vicelich had communicated with Tonkin and Taylor, which is one of PropertyIQ’s clients, following the Christchurch earthquakes. The communication was for the purpose of enabling Ms Vicelich to have computer access to Tonkin and Taylor, when she was no longer going to be working for PropertyIQ in any capacity. The particular site to which she gained access provides maps to properties within the earthquake zone and their status, which is very useful when providing risk assessments for finance and insurance purposes. PropertyIQ says that as Ms Vicelich had no reason to access the information on its account, she must have done so for her own ends.

[15] PropertyIQ’s further investigation into Ms Vicelich’s conduct revealed that she had made plans to meet with Earthquake Commission personnel and appeared to have collected information from PropertyIQ that would allow her to develop something similar to a system that PropertyIQ had developed and supplied to the Earthquake Commission for more efficiently processing earthquake damaged property claims. PropertyIQ’s investigations into the email traffic between Ms Vicelich’s work computer and her personal computer have revealed extensive emails with attachments of information that PropertyIQ regards as its confidential and highly commercially sensitive information.

[16] PropertyIQ also gained access to an email attaching a business plan that Ms Vicelich had prepared for Data Insight, which PropertyIQ asserts shows Ms Vicelich’s plans to compete with PropertyIQ using the confidential information and intellectual property that she has taken from the company.

[17] Despite the evidence of extensive forwarding of emails by Ms Vicelich from PropertyIQ to her home computer, she disputes that her conduct can be interpreted in the way that PropertyIQ contends for. Instead, she attempts to explain her conduct by saying that at the time she worked for PropertyIQ, she had difficulty in printing out hard copies of the company’s electronic information and so she sent the

information to her home computer so that she could print it using the printer connected to her home computer, and also because she often worked from home. She contends that she has not taken PropertyIQ’s confidential information for her own purposes or for those of Data Insight. Furthermore, she alleges that she has since deleted this material from her computers so that it is no longer accessible to her or to Data Insight, and she has offered her computers to PropertyIQ for forensic examination. She also disputes any suggestion that in her conversations with Mr Jefferies in May of this year she said things that would have led him to believe that she had no contact with Mr Psaroulis. Indeed, her account of events is that when Mr Jefferies mentioned Mr Psaroulis, she referred to the recent contact she had with him.

[18] The description of events that is set out in PropertyIQ’s evidence certainly gives cause to suspect the bona fides of Ms Vicelich’s conduct. However, she disputes much of this evidence. It is not possible for me to determine the factual disputes between the parties on the papers. Resolution of the factual issues will need to wait until the trial of this proceeding.

[19] Since the interim injunction application was filed, the parties have helpfully reached some agreement on what constitutes confidential information of PropertyIQ that has come into Ms Vicelich’s possession and what is not. They have also identified another group of documents that have come into Ms Vicelich’s possession, the character of which remains in dispute. For the purpose of the present application, it is necessary to determine if this information is confidential. Once the scope of the confidential information is identified, it will then be necessary to apply the standard tests for the grant of interim relief.

Undisputed information

[20] The parties have identified certain information that Ms Vicelich acquired whilst she was working for PropertyIQ that everyone accepts is the confidential information of PropertyIQ. It follows that there is no lawful basis for either defendant to continue to possess, or to use this information.

[21] The parties are also agreed that certain other identifiable information that Ms Vicelich acquired from PropertyIQ is not that company’s confidential information. Apart from noting the parties’ position here, I see no point in dealing any further with this information.

Disputed confidential information

[22] There is still some information whose character the parties remain at odds over. There is no doubt that Ms Vicelich sent this information to herself while she was working for PropertyIQ. PropertyIQ claims the information is its confidential information that Ms Vicelich sent unlawfully to her home email address. Ms Vicelich disputes this; she claims that she has a lawful excuse for sending the information to her home computer and that the information lacks the character of confidentiality as it is, and always was, publicly available. It is necessary, therefore, to consider the character of this information and how it should be dealt with.

[23] The disputed confidential information has been collected in a bundle. I have read the material. Unfortunately, much of it is not obviously confidential information. Mr Jefferies asserts that the documents in the bundle are confidential, as they either contain information that has the character of confidentiality, or they contain information that PropertyIQ has processed in such a way that the synergistic effect is to give the documents a confidential character: see AB Consolidated Ltd v Europe Strength Food Co Pty Ltd [1978] 2 NZLR 515 (CA) and the discussion therein, particularly at 521. Ms Vicelich, on the other hand, has focused her comments on the original state of the information and the fact that, in a number of cases, the core information is publicly available. In saying this, however, she overlooks the “springboard” benefits that arise in some instances from her having access to the finally worked product, as opposed to having to search in the public domain for the core data and collate it herself. I am not satisfied, therefore, that the public availability of the core data in the bundle of disputed documents is necessarily an answer to the arguments that PropertyIQ makes for protecting the confidentiality of these documents.

[24] The conclusions I have to reach in the context of this application are governed by the standard principles for the grant of interim relief. Before granting interim relief to PropertyIQ, I need to be satisfied that it has established it has a serious case to be argued.

[25] I consider that apart from the specific instances where Mr Jefferies has acknowledged that a document is not confidential (documents 10, 32, 49 and 123), when it comes to characterising the contents of the bundle of disputed documents, PropertyIQ has shown that there are seriously arguable grounds for concluding that the documents are its confidential information: see Skids Programme Management Ltd v McNeill [2012] NZCA 314 at [74]- [92]. Whilst some of the core information contained in the documents might be publicly available, anyone seeking to start from scratch by looking in the public domain for this information might not find it as readily available and as useful as it is in its present form, which is due to the intellectual efforts of PropertyIQ’s personnel and the company’s computerised information systems.

[26] Ms Vicelich asserts that she had a legitimate purpose for sending PropertyIQ’s confidential information to her home computer. But even if her explanation for possessing this information were to be accepted, it is no answer to PropertyIQ’s present concerns to prevent the present and future use of this information by either Ms Vicelich or Data Insight. I can see no legitimate reason for Ms Vicelich to continue to possess or to use this information, now that she has ceased working for PropertyIQ; nor do I understand her evidence to suggest to the contrary.

[27] I consider that the circumstances in which Ms Vicelich came by the information are such that she is susceptible to the obligations of confidence that the action of breach of confidence imposes on persons in such circumstances: see Coco v A N Clark (Engineers) Ltd [1969] RPC 41 (Ch) at 47.

[28] I am also satisfied that the evidence indicates that Ms Vicelich may have made an unauthorised use of the confidential information, or was going to do so in that she has advanced no legitimate excuse for retaining this information following

her ceasing to work for PropertyIQ: see Coco v A N Clark (Engineers) Ltd. Her evidence that she has since deleted electronic copies of the confidential information and destroyed hard copies only came as a response to PropertyIQ’s claim against her.

[29] It follows that PropertyIQ has shown that it has a seriously arguable case when it comes to establishing the three elements that the action of breach of confidence requires a plaintiff to establish: see Coco v A N Clark (Engineers) Ltd, which was approved and followed by the Court of Appeal in Skids Programme Management Ltd v McNeill.

[30] When it comes to considering the balance of convenience, I consider that Ms Vicelich’s evidence that she has now destroyed the copies she held of the confidential information is relevant. To date, PropertyIQ has been unable to satisfy itself that she has done so, and to satisfy itself that she has not translated the subject confidential information into a different form that is useable by her. If she can still use the information, PropertyIQ might suffer irreparable damage. Given the acknowledgement by Ms Vicelich that she no longer has PropertyIQ’s confidential information and her assurance that they would be of no benefit to her, I see no reason why orders should not be made restraining each defendant from using the subject confidential information either in its original form or as a springboard for any information gathering and processing that she might use for her purposes or those of Data Insight. Although Ms Vicelich disputes their character of confidentiality, such matters need to be resolved at trial. In the meantime, the balance of convenience must weigh in PropertyIQ’s favour, as there can be little hardship in suffering restraint from using that which the defendants no longer possess and did not intend to use.

[31] To the extent that Ms Vicelich is concerned that the interim injunction will effectively prevent her from working in her chosen area, those concerns may be allayed. The injunction does not mean that the defendants are to be restrained from searching for core data that is contained in the subject confidential documents, but which is also publicly available in a raw form. Nor is Ms Vicelich restrained from using publicly available professional networking websites such as LinkedIn to search for the contact details of persons whom she met while she was working for

PropertyIQ, and with whom she considers she can now develop business relationships on her own behalf, or that of Data Insight. Further, the restraints that the law of breach of confidence places on her are not the same as a restraint of trade clause. She is free to compete in the marketplace with PropertyIQ, using her general knowledge and experience of the industry, including that which she gained while working for PropertyIQ. This is different from being able to use the confidential information of PropertyIQ with which her role as an employee and later contractor of the company brought her into contact: see Tipping J’s discussion in Peninsular Real Estate Ltd v Harris [1992] 2 NZLR 216 (HC) at 219-221.

[32] I am satisfied, therefore, that PropertyIQ is entitled to interim relief as follows:

(a) Orders restraining the defendants from using, divulging, disclosing, publishing or reproducing any confidential information of PropertyIQ; such information being the information that the parties have agreed is confidential and (except for documents numbered 10, 32, 49 and 123) those documents in the bundle of disputed documents.

(b) The orders sought in 1.2 and 1.3 of PropertyIQ’s first amended notice of application for interim injunction with the amendment that the confidential information referred to in those proposed orders is to be the same confidential information as is identified in [(a)] above.

[33] I am also satisfied that the orders sought in 1.4 of PropertyIQ’s first amended

notice of application for interim injunction should be made and accordingly I do so.

[34] The orders made herein are to last until the end of the day on 11 March 2013, which is the allocated trial date of the proceeding, or until further order of the Court.

[35] PropertyIQ also has a claim against Ms Vicelich for breach of fiduciary obligations. This equitable claim provides no greater protection in the present case than does the action of breach of confidence. I see no reason, therefore, in the context of this application to consider it any further.

[36] The parties have filed subsequent memoranda, the latest of which raises additional issues. None of those issues were pivotal to the outcome of the application. Whilst considering them, therefore, I have not expressly addressed them in detail.

[37] I would note that granting this interim injunction does not amount to effectively determining matters, particularly as the breach of confidence claim has not been finally determined and there are still issues of breach of fiduciary duty, restraint of trade and damages to be considered substantively. As to whether an interim injunction should be granted if to do so has the effect of a substantive grant of a springboard injunction, I am of the view that no injustice will be produced on this occasion, as the defendants have acknowledged they no longer have the information and could not use it anyway.

[38] Leave is reserved to the parties to return to Court on any further issue that is raised by the application for interim relief, should the need to do so arise.

Duffy J