Schlam dunk – Federal Court makes Norwich Pharmacal orders against third party new employer

Jackson J in Austin Engineering Pty Ltd v Podulova & Ors [2023] FCA 419 issued interlocutory Norwich Pharmacal orders against ex-employee Anastasis Podulova and her new employer, the Schlam group of companies (Schlam). These orders allow obtaining information from third parties involved in wrongdoing and help investigate and pursue legal actions. The orders require extensive disclosure of information related to Austin Engineering Pty Ltd’s (Austin) confidential and copyright-protected data.

Background: Austin is an engineering company, and Podulova was its employee until January 13, 2023. She later joined Schlam. After leaving Austin, Podulova kept a computer containing possible Austin information, and evidence suggested she copied it to Schlam’s systems. Austin sued Podulova for breach of confidentiality and copyright infringement.

Austin sought Norwich Pharmacal orders for disclosure of information from Schlam. Podulova agreed to disclose her use of Austin’s information, but Schlam opposed certain orders.

Norwich Pharmacal Orders: Norwich Pharmacal orders were established in the mid 1970s in Norwich Pharmacal Co v Commissioners of Customs & Excise [1974] AC 133, and confirms individuals “who through no fault of his own”, gets “mixed up” in others’ wrongdoing, may come under a duty to assist the wronged party by providing full information and identifying wrongdoers. To obtain these discretionary equitable orders, three criteria must be met: (a) an arguable case of wrongdoing, (b) necessity to enable legal redress, and (c) the party’s involvement beyond being a mere witness.

Federal Court Decision: Schlam argued that the order should only be made if Austin would suffer irreparable damage. Justice Jackson rejected this, stating irreparable damage is not a prerequisite. Once the three criteria are met, the Court exercises its discretion.

Justice Jackson found the relevant criteria were met and Schlam was required to provide the information.

Conclusion: This case affirms the usefulness of Norwich Pharmacal orders in intellectual property infringement cases. It also highlights the Court’s discretion in considering relevant factors, especially when evidence may have been destroyed or integrated into a new employer’s systems. Employers are reminded to include relevant warranties and terms in employment contracts to protect against breaches of confidence and intellectual property rights. With advancing technology, more of these orders may be sought in the future.

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