2ND CHAPTER PTY LTD (ACN 631 879 439) (and others according to the Schedule)	First Plaintiff
v
PAUL STUART SEALEY (and others according to the Schedule)	First Defendant

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JUDGE:	Waller J
WHERE HELD:	Melbourne
DATE OF HEARING:	5 October 2023
DATE OF RULING:	10 October 2023
CASE MAY BE CITED AS:	2nd Chapter Pty Ltd & Ors v Sealey & Ors
MEDIUM NEUTRAL CITATION:	[2023] VSC 599

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INJUNCTIONS — Application for interlocutory injunctions — Where plaintiffs seek to restrain first and second defendants from engaging in business in wealth management industry and from soliciting plaintiffs’ clients — Principles relevant to granting interlocutory injunctions — Whether serious question to be tried (prima facie case) — Whether balance of convenience favours granting injunction — Principles relevant to enforcement of restraint of trade covenants — Lower risk of injustice — No serious questions to be tried — Balance of convenience weighs against granting of interlocutory injunction — Damages likely an adequate remedy — Interlocutory injunction refused and summons dismissed.

Kingdom Animalia LLC v Mecca Brands Pty Ltd [2023] VSCA 55 — Wombat Forestcare Inc v VicForests [2023] VSC 582 — Transonic Travel Pty Ltd v Tilakee Nominees Pty Ltd [2021] VSC 413 — Findex Group Ltd v McKay [2020] FCAFC 182 — Southern Cross Computer Systems Pty Ltd v Palmer (No 2) [2017] VSC 460 — Popham Holdings Pty Ltd v Franklin [2016] VSC 597 — Just Group Ltd v Peck (2016) 344 ALR 162 — Wallis Nominees (Computing) Pty Ltd v Pickett [2013] VSCA 24 — Australian Broadcasting Corporation v O’Neill (2006) 227 CLR 57 — Bradto Pty Ltd v State of Victoria (2006) 15 VR 65 — Werribee Football Club v Tattersalls Gaming Pty Ltd [2005] VSC 144 —Butt v Long (1953) 88 CLR 476, referred to.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiffs	Mr A Broadfoot KC with Mr R May	Cornwalls NSW
For the Defendants	Mr C O’Grady KC with Mr E Gisonda	Seyfarth Shaw Australia

Table of Contents

A Factual background

Share Purchase Agreement
Shareholders Agreement
Management Deed
Employment Agreements
Departure of Mr Sealey, Mr Vickers-Willis and Escala’s clients

B Principles — Interlocutory injunctions

C Principles — Restraints of trade

D Serious question to be tried — Prima facie case

The Share Purchase Agreement
The Shareholders Agreement
The Management Deed
The Employment Agreement

E No serious questions to be tried

F Balance of Convenience

G Orders

HIS HONOUR:

This matter came before the Court as an urgent application, which I heard as the Commercial Court Duty Judge on 5 October 2023.
By summons filed 27 September 2023, the plaintiffs seek an interlocutory injunction pending the hearing and determination of the proceeding restraining the first defendant, Mr Paul Sealey, and the second defendant, Mr Jonathan Vickers-Willis, from in Australia:
(a)engaging in a business or an activity in the wealth management industry;
(b)soliciting, canvassing, approaching or accepting an…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading 2nd Chapter Pty Ltd v Sealey

Details

AGLC: 2nd Chapter Pty Ltd v Sealey [2023] VSC 599
Case: [2023] VSC 599
Decision Date: 10 October 2023

CaseChat Overview and Summary

2nd Chapter Pty Ltd sought to restrain the first and second defendants from engaging in business within the wealth management industry and from soliciting its clients. The application was heard by the Supreme Court of Victoria. The plaintiffs sought interlocutory injunctions, which would prevent the defendants from acting in breach of their restraint of trade covenants, as well as an interlocutory damages order. The defendants opposed the application, arguing that the plaintiffs had no serious question to be tried, that the balance of convenience favoured them, and that damages would be an adequate remedy.
The court considered the principles relevant to granting interlocutory injunctions, including whether there was a serious question to be tried and whether the balance of convenience favoured granting the injunction. The court found that there was no serious question to be tried, as the restraint of trade clauses were clearly drafted, the defendants had acknowledged their obligations, and the plaintiffs had a strong case for enforcing the restraints. The court also found that the balance of convenience favoured the defendants, as the plaintiffs had not demonstrated that they would suffer irreparable harm if the injunctions were not granted, and that damages would be an adequate remedy. The court held that the defendants had a lower risk of injustice and that the restraint of trade covenants should be enforced.
The interlocutory injunctions were refused and the summons was dismissed. The court found that the plaintiffs had not demonstrated a serious question to be tried, that the balance of convenience favoured the defendants, and that damages would be an adequate remedy. The defendants were entitled to engage in business within the wealth management industry and to solicit the plaintiffs' clients, subject to the terms of their restraint of trade covenants. The court noted that the plaintiffs had not demonstrated that they would suffer irreparable harm if the defendants were allowed to continue their business, and that damages would be an adequate remedy. The court also found that the restraint of trade covenants were reasonable and enforceable, and that the defendants had a lower risk of injustice. The court held that the defendants were entitled to engage in business within the wealth management industry and to solicit the plaintiffs' clients, subject to the terms of their restraint of trade covenants.

Orders