Arthur Rubber had operated in the Riverina since the 1990s when Bill Arthur started a shop selling rubber and foam products and later swimming pools.
In February 2006 Andrew Petersen joined the business as manager. The shop was small—about five employees—but Petersen quickly became central to operations. He introduced the MYOB Retail Manager point-of-sale system, handled customers, ordered stock and oversaw marketing.
When ownership changed in 2010 to Peter Butt and Leonie Lewis, and again in 2017 when John Bailey and his wife Lisa purchased the business through their company Direct Flow for about $175,000 plus stock, Petersen remained the operational backbone of the store.
Over the years Petersen also produced a detailed industrial products catalogue listing thousands of rubber and foam items with prices, photographs and specifications. Several editions were created between 2007 and 2017, much of the work being done by Petersen at home in his own time.
By the time the Baileys purchased the business, a seventh edition was in print and Petersen believed he had invested considerable personal effort in developing it.
Relations between Petersen and the new owner deteriorated quickly.
One early flashpoint was the discovery that Petersen had previously registered the business name “Arthur Rubber” in his own name without telling the owners. Although he eventually transferred it back, the episode damaged trust. Further tension arose when Petersen asked to be paid for creating the seventh edition of the catalogue and Bailey refused.
Evidence later showed that Petersen had been quietly laying groundwork for future opportunities. As early as 2016 he was working with a marketing firm to develop a new website using the “Arthur Rubber” name and had registered the relevant domain.
Emails suggested he hoped to create what he described as the “real Arthur Rubber” and keep open the possibility of benefiting personally from the marketing work he was developing.
By late 2017 the relationship had broken down. In November, Petersen downloaded the company’s customer list from the MYOB system onto his personal computer. The document contained about fifty pages of information identifying more than 1,800 customers.
Within weeks Petersen registered the business name Maxx Rubber, resigned from Arthur Rubber on 4 December 2017 and began trading independently early in 2018.
Direct Flow alleged that Petersen had misused confidential information and breached his fiduciary duties while still employed. The company argued that the customer list and other business data were confidential trade information and that Petersen used them to create a “springboard” advantage for his competing Maxx Rubber business.
The case came before Justice Mark Richmond in the NSW Supreme Court where Direct Flow was able to point out that many of Petersen’s early sales were to customers appearing on the Arthur Rubber list.
Petersen’s defence focused on the limits of his employee obligations.
He accepted that customer lists can be confidential but argued there was no proof he actually used the list to solicit customers.
He claimed many clients had dealt with him personally for years and contacted him after learning he had left the store. Importantly, the list did not contain phone numbers, and he denied using it as a marketing tool.
Justice Richmond accepted that the customer list was confidential information and that Petersen had taken it secretly. The judge also rejected Petersen’s explanation that the download was harmless, particularly after discovering he later renamed the file “Mum’s recipe – Meat Loaf” in what appeared to be an attempt to conceal it.
He observed though that former employees are allowed to rely on personal knowledge and relationships with customers once employment ends.
The judge was more critical of Petersen’s conduct before he resigned.
Secretly registering the business name, developing marketing assets and positioning himself to launch a rival venture while still managing the store placed his personal interests in conflict with those of his employer. That conduct breached the fiduciary duty of loyalty owed by an employee in a position of trust.
The final battle concerned damages. Direct Flow sought about $130,000 in equitable compensation, arguing that Petersen’s conduct diverted customers and reduced sales after his departure.
The evidence, however, was limited. Sales fluctuations could have resulted from many factors including market conditions and the recent change in ownership. Without clearer proof linking lost revenue directly to Petersen’s actions, the court was unwilling to award the full amount claimed.
Justice Richmond ultimately ordered Petersen to pay $50,000 in equitable compensation.
The award reflected the court’s view that Petersen’s conduct gave him an unfair head start, even though the plaintiff could not precisely quantify its financial loss.
Direct Flow Pty Ltd t/as Arthur Rubber v Petersen [2026] NSWSC 171 Richmond J, 11 March 2026
