Argus Administration Pty Ltd v Caldwell

Case [2018] QSC 281


SUPREME COURT OF QUEENSLAND

CITATION:

Argus Administration Pty Ltd & Ors v Caldwell & Anor [2018] QSC 281

PARTIES:

Argus Administration Pty Ltd – 614702528

(First Plaintiff)
and

Argus Accounting Pty Ltd – 612896358

(Second Plaintiff)

and
Argus Private Pty Ltd – 159585190

(Third Plaintiff)

v
Ivan Caldwell

(First Defendant)
and
Yvonne Grogan

(Second Defendant)

FILE NO/S:

SC No 317 of 2018

DIVISION:

Trial

PROCEEDING:

Application

ORIGINATING COURT:

Supreme Court at Cairns

DELIVERED ON:

30 November 2018

DELIVERED AT:

Cairns

HEARING DATE:

7 September 2018

JUDGE:

Henry J

ORDERS:

1.   In respect of the plaintiffs’ application for an injunction:

(a)     application dismissed;

(b)     the plaintiffs will pay the defendants’ costs of the application to be assessed on the standard basis if not agreed.

2.   In respect of the defendants’ application for summary judgment and strike-out:

(a)   judgment for the defendants as against the second and third plaintiffs;

(b)   paragraphs 24 to 27 inclusive of the amended statement of claim are struck out, excluding sub-paragraphs 24(a) and 24(b);

(c)    the costs of the application are reserved pending the determination of the summary judgment application as against the first plaintiff;

(d)   if the first plaintiff seeks to continue its claim it will file and serve a further amended statement of claim by no later than 4 pm 19 January 2019, which further amended statement of claim is to resolve the pleading deficiencies identified in these reasons and reflect the removal of the second and third plaintiffs as plaintiffs;

(e)   the defendants will give notice to the first plaintiff by no later than 4 pm 28 January 2019 as to whether it seeks to continue its application for summary judgment as against the first plaintiff;

(f)     the matter is listed for review at 9.15 am 30 January 2019 at which time, if the application for summary judgment is to continue, directions will be made as to the future carriage of the application, and if it is not to continue, the parties will be heard as to the costs of the application.

CATCHWORDS:

CONTRACTS – GENERAL CONTRACTUAL PRINCIPLES – CONSTRUCTION AND INTERPRETATION OF CONTRACTS – OTHER

MATTERS – Where employment contracts contained confidentiality clauses – proper construction of confidentiality covenants in employment contract – whether confidentiality clauses were valid – whether former employees breached confidentiality clauses – whether the second and third plaintiffs’ claims cannot succeed because the contracts allegedly breached were contracts to which they were not privy.

EMPLOYMENT – EMPLOYER AND EMPLOYEE – CONTRACT OF EMPLOYMENT – TRADE AND COMMERCE – OTHER REGULATION OF TRADE OR COMMERCE – RESTRAINTS OF TRADE – VALIDITY AND REASONABLENESS – proper construction of restraint of trade covenants in employment contract – whether restraints were valid and reasonable – whether former employees breached restraints – whether the second and third plaintiffs’ claims cannot succeed because the restraints allegedly breached were in contracts to which they were not privy.

PROCEDURE – SUPREME COURT PROCEDURE – QUEENSLAND – PROCEDURE UNDER UNIFORM CIVIL PROCEDURE RULES AND PREDECESSORS – PLEADING –…

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AGLC
Argus Administration Pty Ltd v Caldwell [2018] QSC 281
Case
[2018] QSC 281
Decision Date

CaseChat Overview and Summary

Argus Administration Pty Ltd v Caldwell involves a dispute regarding the validity of confidentiality and restraint of trade clauses in employment contracts. The plaintiffs, Argus Administration Pty Ltd, Argus Business Services Pty Ltd, and Argus Financial Services Pty Ltd, allege that former employees, the defendants, breached these clauses by joining a competitor and using confidential information. The primary legal issues before the court were whether the confidentiality and restraint of trade clauses were valid, whether the former employees breached these clauses, and whether the second and third plaintiffs' claims could proceed as they were not parties to the employment contracts in question. The court had to determine if the summary judgment application could be granted under rule 293 of the Uniform Civil Procedure Rules 1999 (Qld), which requires the court to be satisfied that the plaintiff has no real prospect of succeeding on all or part of the claim and that there is no need for a trial.

The court found that the second and third plaintiffs' claims were deficient because they were not parties to the employment contracts which the defendants allegedly breached. The amended statement of claim referred to a collective entity known as the "Argus Group," but this was not a separate legal entity capable of suing or being sued. Each plaintiff company is a separate legal entity, and under the doctrine of privity of contract, only the parties to a contract can benefit from its stipulations. The court granted summary judgment in favour of the defendants against the second and third plaintiffs and struck out specific paragraphs from the amended statement of claim. The court also dismissed the plaintiffs' application for an interlocutory injunction, ordering the plaintiffs to pay the defendants' costs of the application.

In summary, the court found that the second and third plaintiffs' claims could not proceed as they were not parties to the employment contracts in question. The court granted summary judgment in favour of the defendants against the second and third plaintiffs and struck out specific paragraphs from the amended statement of claim. The court also dismissed the plaintiffs' application for an interlocutory injunction and ordered the plaintiffs to pay the defendants' costs of the application. The court reserved the costs of the application against the first plaintiff pending the determination of the summary judgment application and ordered the first plaintiff to file a further amended statement of claim if it wished to continue its claim.

Orders

Orders of the court

1. In respect of the plaintiffs’ application for an injunction:

(a) application dismissed;

(b) the plaintiffs will pay the defendants’ costs of the application to be assessed on the standard basis if not agreed.

2. In respect of the defendants’ application for summary judgment and strike-out:

(a) judgment for the defendants as against the second and third plaintiffs;

(b) paragraphs 24 to 27 inclusive of the amended statement of claim are struck out, excluding sub-paragraphs 24(a) and 24(b);

(c) the costs of the application are reserved pending the determination of the summary judgment application as against the first plaintiff;

(d) if the first plaintiff seeks to continue its claim it will file and serve a further amended statement of claim by no later than 4 pm 19 January 2019, which further amended statement of claim is to resolve the pleading deficiencies identified in these reasons and reflect the removal of the second and third plaintiffs as plaintiffs;

(e) the defendants will give notice to the first plaintiff by no later than 4 pm 28 January 2019 as to whether it seeks to continue its application for summary judgment as against the first plaintiff;

(f) the matter is listed for review at 9.15 am 30 January 2019 at which time, if the application for summary judgment is to continue, directions will be made as to the future carriage of the application, and if it is not to continue, the parties will be heard as to the costs of the application.

Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

The test for summary judgment in r 293 of the Uniform Civil Procedure Rules 1999 (Qld) (“UCPR”), consistently with r 292’s mirror provision for a plaintiff’s application, is:“293. Summary judgment for defendant…(2) If the Court is satisfied –(a)the plaintiff has no real prospect of succeeding on all or the part of the plaintiff’s claim; and(b)there is no need for a trial of the claim or the part of the claim;the court may give judgment for the defendant against the plaintiff for all or the part of the plaintiff’s claim and may make any other order the Court considers appropriate.” The philosophy underpinning r 293 is that a plaintiff ought not be denied the opportunity to place his or her case before the court[4] unless the defendant satisfies the court that the plaintiff does not have a real as opposed to fanciful prospect of succeeding on all or part of the claim.[5] The requirement of satisfaction is to be applied in conjunction with the requirement that the court be satisfied there is no need for a trial, thus requiring there exists a high degree of certainty the claim would fail were it allowed to continue in the ordinary way.[6] [4] Agar v Hyde (2000) 201 CLR 552, 575-576.[5] Deputy Commissioner of Taxation v Salcedo [2005] 2 Qd R 232, [17].[6] LCR Mining Group Pty Ltd v Ocean Tyres Pty Ltd [2011] QCA 105, [26]-[30]. Rule 293 is readily satisfied in the summary judgment application as against the second and third plaintiffs. That component of the application relies upon the foundational deficiency that the second and third plaintiffs were not parties to the contracts of employment which the defendants are alleged to have breached. The deficiency was identified at the time of their unsuccessful application for summary judgment. They have not overcome it. In pleadings not present in the initial Statement of Claim, the Amended Statement of Claim refers to a group of companies, consisting of the three plaintiffs and two other companies, as “the Argus Group” or “Argus”.[7] It describes them collectively as operating “a financial services business providing accounting, taxation, finance, financial planning, superannuation, personal insurance and related services”. The pleadings and the filed evidence do not allege the collective business of those companies is a separate legal entity capable of suing or being sued. The so-called Argus or Argus Group is merely a name, it is not an individual legal entity.[7] Amended Statement of Claim court doc 15 [H] It is trite that each of the plaintiff companies is a separate legal entity. It is also trite that under the doctrine of privity of contract it is ordinarily only the parties to a contract who may benefit from its stipulations.[8][8] Trident General Insurance Co Ltd v McNiece Bros Pty Ltd (1988) 165 CLR 107, 113-115. The amended statement of claim pleads the defendants each signed a contract of employment but is conveniently silent as to which plaintiff or plaintiffs were parties to the all-important contracts with the defendants. Ignoring that telling gap the amended statement of claim pleads – in a pleading not present in its initial statement of claim – that, “All employees of Argus are employed by the entire Argus Group and not the First Plaintiff solely”.[9] Bearing in mind that the terms “Argus” and the “Argus Group” are at best merely names used in the amended statement of claim to refer to a number of companies, and not to a single legal entity, this pleading in effect asserts the defendants were employed by each of the plaintiff companies and two other companies. [9] Amended Statement of Claim court doc 15, eg compare [F] – [K].

Ratio Decidendi

Legal Principle Established

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