Sullivan, Sullivan & Anor v Sclanders & Anor
On 18 August 2000 the Full Court of the Supreme Court of South Australia handed down a judgment dealing with the consequences of the unauthorised taking of confidential information.
Robert Sullivan ("Sullivan") and his wife are the sole shareholders in a company called GKR Karate Australia Pty Ltd ("GKR"). GKR is an Australian based Karate business which operates through associated entities overseas. In October 1999 Sullivan had a falling out with the managing director of GKR, Adrian Sclanders ("Sclanders"). Sclanders was removed as managing director of GKR and subsequently resigned as a director of GKR and its associated entities.
Rod Martin ("Martin") was employed by one of GKR’s associated entities on London. In February 2000 Sullivan visited Martin and stayed with he and his wife at their house. During his visit Mr and Mrs Martin arranged for Sullivan to be absent from the house with Martin to attend a training session.
While Sullivan was absent from the house Mrs Martin went though his suit case and removed a number of confidential documents (the documents"). She then photocopied these documents and replaced the originals in the suit case. Mrs Martin then telephoned Sclanders and informed him of her actions and then faxed the documents to him in Australia.
Sclanders subsequently issued proceedings against Sullivan for breach of a business development agreement which had been entered into by Sullivan, Sclanders and GKR. The contents of the documents obtained by Mrs Martin allegedly supported Sclanders’ allegation that Sullivan had improperly sought to deprive him of his rightful entitlements under the business development agreement.
The issue before the Full Court was whether Sclanders should be allowed to make use of the information contained in the documents.
Sullivan contended that the documents should be delivered up to him and that Sclanders should be restrained from making use of the information that he had obtained from the documents.
Sclanders contended that as the documents contained evidence that Sullivan had acted iniquitously Sullivan should not be allowed to prevent Sclanders from making use of the documents. He argued that the documents were evidence that Sullivan sought equitable remedies from the court whilst having unclean hands. Alternatively, Sclanders argued that he was protected by the public interest defence in that it was in the interest of the public for information contained in the documents to come to light and that this interest of the public should outweigh the interest of Sullivan in protecting his confidential information.
The Full Court held that the public interest defence does not exist in Australia. A more limited defence called the iniquity rule was affirmed however. The court held that it is only in situations where the confidential information sought to be protected evidences serious wrongdoing by the person seeking its protection that the courts will deny that protection.
Thus, regardless of the benefit to the public in the disclosure of an item of confidential information, Australian courts will restrain the disclosure or publication of confidential information unless the information evidences a crime or a serious wrong or misdeed on the part of the party seeking to prevent the disclosure of the information.