Harris v Digital Pulse Pty Ltd

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Citation: Harris v Digital Pulse Pty Ltd [2003] NSWCA 10.

This information can be found in the textbook [1] pp 281-294.

Contents

Background Facts

  • Harris and Eden were employees of Digital Pulse, but they started up their own company that was a direct competitor of Digital Pulse, in contravention of their contract of employment.
  • The trial judge found that they had breached their fiduciary (equitable) and contractual (common law) duties of loyalty, ordered to pay equitable compensation and exemplary (punitive) damages.
  • However, they said that exemplary damages could not be administrated as it is a common law (tortious) remedy, and that this was purely an equitable claim.

Legal issues

Judgment

Spigelman CJ:

  • His honour disagrees that the running together of equity and law is an issue, as there is flexibility within equity jurisprudence - the real issue is whether this should be acknowledged with the kind of fiduciary relationship that is brought up.
  • The separation of common law and equity is more pronounced in Australia than in Canada and NZ, which have similar legal frameworks.
  • The heart of the fusion fallacy is the idea that because two branches of law are administered together, one is applicable to the other - his honour only concedes that they can influence one another.
  • Given the commonality of this kind of case, and given the fact that equity has never in the past saw fit to administer a punitive damage, shows that development of the law in this way is inappropriate.
    • He cites Chapman v. Chapman [2] and says ‘that we are not wiser than our ancestors’ - as equity judges never sought to give both compensatory and punitive damages, why do it now?
  • His honour discusses an analogy with tort or contract:
    • In the prior judgement, Mason P asked whether equity jurisprudence should be analogized with contract or tort - Spiegelman says that looking at it so generally is inappropriate.
      • If anything, he says there is a closer analogy between equity and contracts in this case rather than equity and torts.
    • He claims that, since equity is concerned with the conscience of both parties, punitive damages is placing an additional burden on the parties - even still, he cites Lamb v Cotogno [3] which establishes that the purpose of punitive damage is not confined merely to punishment or deterrence, but also appeasement of the plaintiff to assuage any urge for revenge, and to make the court’s denunciation of the behaviour.
    • All of these, say Spiegelman, are public issues that DON’T INVOLVE a balancing act inter partes (between parties) and hence, he thinks that punitive damages should not be awarded.
  • Spigelman CJ believes the appeal should be allowed.

Mason P:

  • Cites Viscount Haldane’s speech in Nocton v Lord Ashburton [4] and exposes the error of restricting equity’s capacity to award compensation for infringement of a right recognised in the pre-Judicature Act era.
  • Claims that the ability of equity to offer different remedies is expansive - he claims that the idea that equity is supposed to be compensatory rather than punitive, the cited cases don’t stand in the way to award exemplary damages.
  • He thus disagrees with Spigelman CJ and decides that the fusion fallacy itself is false - he claims that both equity and common law had adequate powers to adopt and adapt concepts from each other’s system before the passing of the Judicature Act.
  • The ideas and principles of equity are not so superior to common law concepts that equity can’t pick from common law ideas.
  • His honour also says that distinctions with nothing but history to support them have often been weeded out.
  • Identifies that the appellants are saying that equity cannot be about punishment whatsoever - he claims that equity reveals itself readier to punish if actions were deliberate or motivated by greed.
    • As an example of this, he cites the fact that there are alternative remedies - there are a hierarchy of remedies involved in equity, this solidifying its punitive / deterrent potential.
  • There is a larger similarity between fiduciary duties and contractual relationships.
  • He claims that equity intervened in the first place because of such dogmatism - why would it stand back and let a similar thing happen here, based on something so trivial?
  • Mason P believes the appeal should be dismissed.

Heydon JA:

  • His honour disagrees with Mason P but still thinks the idea may be a ‘distraction, not a difference’.
  • His honour acknowledges that the trial law was correct when claiming that he was essentially creating new law upon his decision - he now claims that doing this is a radical step that may affect the operation of legal regimes established by statute.
  • His honour then concludes by saying that the proposition has no English or Australian legal support and so should not be changed.
  • Heydon JA believes the appeal should be allowed.

References

  1. Prue Vines, Law and Justice in Australia: Foundations of the Legal System, (2nd ed, Melbourne, Oxford University Press, 2009).
  2. [1954] AC 429 at 444
  3. (1987) 164 CLR 1
  4. [1914] AC 932
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