Austal Ships Pty Ltd v Clay - [2018] WASC 178

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CIVIL

CITATION:   AUSTAL SHIPS PTY LTD -v- CLAY [2018] WASC 178
CORAM:   SMITH AJ
HEARD:   13 JUNE 2018
DELIVERED          :   15 JUNE 2018
FILE NO/S:   CIV 1982 of 2018
BETWEEN:   AUSTAL SHIPS PTY LTD
Plaintiff
AND
MARK CLAY
Defendant

Catchwords:

Interlocutory injunction - Construction of restraint of trade clause in contract of employment - Ex-employee seeking to work for former employer's competition - Whether serious question to be tried - Prima facie restraint is reasonable to protect confidential information - Balance of convenience favours grant of injunction

Legislation:

Nil

Result:

Interim injunction granted until trial

Category: B

Representation:

Counsel:

Plaintiff	:	Mr I Neil SC
Defendant	:	Ms F A Stanton & Ms N J Barsby

Solicitors:

Plaintiff	:	Clayton Utz
Defendant	:	MDC Legal

Case(s) referred to in decision(s):

Bullock v Federated Furnishing Trades Society of Australasia (No 1) (1985) 5 FCR 464
Castlemaine Tooheys v State of South Australia (1986) 161 CLR 148
DP World Sydney Ltd v Guy [2016] NSWSC 1072; (2016) 262 IR 156
Emeco International Pty Ltd v O'Shea [2012] WASC 282
Emeco International Pty Ltd v O'Shea [No 2] [2012] WASC 348
Herbert Morris Ltd v Saxelby [1916] 1 AC 688
Huhtamaki Australia Ltd v Botha [2004] NSWSC 386
Littlewoods Organisation Ltd v Harris [1977] WLR 1472
Nomad Modular Building Pty Ltd v Smith [2007] WASC 117
Nordenfelt v Maxim Nordenfelt Guns & Ammunition Co Ltd [1894] AC 535
Peters (WA) Ltd v Petersville Ltd (2001) 205 CLR 126
Robert Half Australia Pty Ltd v Cross [2013] WASC 182
Smith v Nomad Modular Building Pty Ltd [2007] WASCA 169
Twinside Pty Ltd v Venetian Nominees Pty Ltd [2008] WASC 110
Willhart v Samimi [2000] WASC 239
Workplace Access and Safety Pty Ltd v Mackie [2014] WASC 62

SMITH AJ:

Background

Austal Ships Pty Ltd (Austal) has issued proceedings seeking enforcement of a restraint of trade clause against the defendant, Mark Clay a former employee. By notice, Mr Clay terminated his employment with Austal on 8 June 2018 to commence employment as a project manager with a competitor of Austal, Civmec, to work on a project known as the OPV project, which is work Austal had recently tendered for.
Austal designs, builds and maintains large complex ships for both commercial and naval customers around the world. The vessels it builds are both aluminium and steel. The vessels include a range of equipment and systems including electrical, piping, propulsion, control and monitoring, and furnishings that Austal also designs, specifies, procures, installs and maintains.
There are two main parts of Austal's business. Austal designs and constructs vessels. It carries out design and construction work at shipyards in Henderson in Western Australia, in the Philippines and Alabama in the United States of America. It also supports and maintains vessels. This is referred to as 'sustainment' work in the industry.
Austal has been in the business of shipbuilding for 30 years, with continuous operations in Australia over that time.…

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.

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Details

Case: [2018] WASC 178
Decision Date: 15 JUNE 2018

CaseChat Overview and Summary

The case involved Austal Ships Pty Ltd, a shipbuilding company, and an ex-employee, Mr Clay. Mr Clay sought to join a competitor of Austal, and Austal applied for an interlocutory injunction to prevent him from doing so, arguing that his employment contract contained a restraint of trade clause prohibiting him from working for a competitor for a specified period. The court had to determine whether the clause was enforceable and if the balance of convenience favoured granting the injunction.

The primary legal issue before the court was whether the restraint of trade clause in Mr Clay's employment contract was reasonable and enforceable, and if so, whether the balance of convenience favoured granting the interlocutory injunction. The court also needed to consider whether Mr Clay's employment with the competitor would seriously injure Austal's business by causing it to lose confidential information and competitive advantage.

The court found that the restraint of trade clause was reasonable and enforceable to protect Austal's confidential information and competitive advantage. The clause was not overly broad, as it was limited in duration and geographical scope, and it protected legitimate business interests. The court also found that Mr Clay's employment with the competitor would seriously injure Austal's business by causing it to lose confidential information and competitive advantage. The balance of convenience favoured granting the interlocutory injunction, as the potential harm to Austal outweighed any inconvenience to Mr Clay.

The court granted the interlocutory injunction, preventing Mr Clay from working for the competitor until the final determination of the case. The court emphasised that the injunction was not a final determination of the merits of the case, and that Mr Clay would have the opportunity to challenge the enforceability of the restraint of trade clause at the final hearing.

Orders