Preliminary discovery application takes a Toll on former employee

In a decision handed down by the Federal Court of Australia, Toll Transport Pty Ltd (Toll Transport) has been successful in a preliminary discovery application against a former employee of the Toll Group, Mr Stephen Fleiter, for the production of removable storage devices.

Mr Fleiter was employed by Toll NQX in the position of National Sales Manager. In this role, Mr Fleiter had access to commercially sensitive information, including pricing information and profit margins.

Mr Fleiter ceased employment with Toll NQX on 12 August 2016 before commencing with a competitor on 10 October 2016.

Toll Transport subsequently conducted a forensic examination of Mr Fleiter’s former work laptop. This examination disclosed, among other things, that three separate USBs were inserted into the laptop the day before the end of Mr Fleiter’s employment, and that on those USBs Mr Fleiter had accessed files of clients who had since severed their relationship with Toll NQX.

Toll Transport applied to the Federal Court seeking the discovery of the removable storage devices disclosed by the forensic examination. Toll Transport sought this on the basis that it may have the right to obtain relief against Mr Fleiter under s 183 of the Corporations Act 2001 (Cth), under contract or at equity.

Justice Logan held that the three conditions for an order for preliminary discovery were made out, in that:

• Toll Transport reasonably believed it may have the right to obtain relief against Mr Fleiter
• Toll Transport had made reasonable inquiries, which failed to yield sufficient information to enable it to decide whether to start a proceeding to obtain relief and
• Mr Fleiter was likely to have the removable storage devices in his possession and that those devices would be directly relevant to whether Toll Transport had a right to obtain relief.

In finding for Toll Transport, Justice Logan noted that ultimately the decision to make the order was at the Court’s discretion.

Lesson for employers

This decision serves as a reminder to employers of the importance of comprehensive confidentiality, non-compete and non-solicitation clauses when it comes to senior employees. Further, that in circumstances where an employee is leaving to join a competitor, a forensic analysis of that employee’s computer may be well worth the effort.