Austal Ships Pty Ltd v Clay
[2018] WASC 178
•15 JUNE 2018
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. It has been designing and building the vessels for the Commonwealth Government of Australia for the last 19 years.
Austal's largest clients are the US Navy, the Australian Defence Department and the Australian Border Force. It also makes patrol boats for other countries including Kuwait, Oman, Malta and Trinidad and Tobago. It also makes commercial ferries and oil and gas support vessels.
In Western Australia, traditionally there are three companies that focus on building boats, one of which is Austal. The other two companies focus on high end luxury yachts and Austal focuses on large passenger ferries and the defence sector.
Austal has more than 700 active suppliers supporting its operations in Australia. These companies range from major international suppliers of engines and propulsion equipment to small local companies supplying parts and fixtures or performing subcontracted services in Austal facilities.
Competing in the defence sector in Australia there is only ASC in South Australia, Austal and now Civmec.
Of importance, in this matter, it is not in dispute that Civmec is a direct competitor of Austal.
Civmec is a fabrication and construction company that has historically focused on civil engineering structures built from concrete and steel for use in the mining, oil and gas and commercial construction sectors. It appears that it has only recently taken steps to enter the shipbuilding industry.
Civmec is a multi‑disciplinary fabrication and construction company who performs bulk earthworks, concrete construction, steel fabrication, structure work, mechanical and piping erection, electrical work, modular assembly, pre‑cast concrete supply, refractory installation, painting on‑site and off‑site, thermal and kiogenetic installation. They provide services to the oil and gas, metals and minerals, infrastructure and defence sectors. Civmec has approximately 2,500 suppliers that it utilises for different operations. These suppliers range from providers of consumables used in the day‑to‑day operation of the business to various material and equipment suppliers and subcontractors.
In Western Australia, Civmec have an existing facility in Henderson that opened in 2012 and is currently building a new facility just south of the existing facility. The new facility is intended to be a multi‑purpose facility that can be used for modular construction for oil and gas or research projects as well as shipbuilding.
Civmec's current scope of work in the shipbuilding industry is to perform work on a construction of offshore patrol vessels (the OPV project) for the Commonwealth Government of Australia. Austal partnered with a German company Fassmer and tendered for the OPV project. Civmec partnered with another German company Luerssen for the work and were successful in obtaining the contract for the work.
Austal was informed of the outcome of the tender process for the OPV project on or about 22 November 2017. Of 12 offshore patrol vessels to be constructed as part of the OPV project, 10 are to be constructed in Henderson by Civmec.
During the period December 2017 to May 2018, Austal engaged in commercial negotiations with Luerssen, at the direction of the Commonwealth Government, to determine if Austal could share with Civmec in the Henderson based shipbuilding work. On or about 11 May 2018, Austal was informed by Luerssen that it would not be engaged as a subcontractor or a partner in any form in relation to the OPV project.
Defendant's role at Austal
Mr Clay commenced employment at Austal on or about 18 August 2014 as an assistant project manager, reporting to the production manager. The material terms of his contract of employment are as follows:[1]
[1] Affidavit of Lisa Jane Breen, sworn 11 June 2018, annexure LB‑2, pages 38 - 44.
2.1 POSITION
You will be employed in the position set out in Item 7 of Appendix A or any other position that may be agreed in writing between the Company and the Employee from time to time.
You will report to the person set out in Item 8 of Appendix A.
…
5.1 TERMINATION OF EMPLOYMENT
Either you or the company may terminate this employment agreement at any time by giving the required notice set out in Item 13 of Appendix A in writing to the other party, other than during the probation period of employment where Clause 1.4 will apply.[2]
[2] Item 13 of Appendix A specified a notice period of four weeks.
…
6. CONFIDENTIALITY
During your employment and afterwards, you shall keep confidential all Confidential Information which you have acquired during the course of your employment, unless you are required by law to disclose this information to other parties in the course of your duties and the best interests of Austal.
You must also take whatever measures are reasonably necessary to preserve the Confidential Information, including:
(a)complying with all security measures established to safeguard Confidential Information from access or unauthorised use;
(b)keeping Confidential Information under your control; and
(c)not removing Confidential Information from, or accessing Confidential Information from outside, the company's premises without the prior approval of the company.
You must immediately notify the company of any suspected or actual unauthorised use, copying or disclosure of Confidential Information. For the purposes of this clause, 'Confidential Information' means all confidential information of the company including but not limited to knowledge and information concerning the interests, design, technology and affairs of the company, trade secrets, confidential know how, client lists, supplier lists, price lists, information about tenders and proposals to prospective clients, prospective client lists, information about products and services in development, business plans, marketing plans and computer software owned by or used by the company of which you becomes [sic] aware or generates (both before and after the day this agreement is signed).
…
8. RESTRAINT OF TRADE
8.1 DEFINITIONS
In this clause:
(a)'Restraint Area' means each of the following areas separately:
(i)Perth;
(ii)Western Australia;
(iii)Australia;
and any other jurisdiction, territory or nation where the Company, within the 12 months prior to the termination of employment, has undertaken investments or operations;
(b)'Restraint Period' means 6 months following the termination of the employee's employment with the Company (howsoever caused); and
(c)'Business' means the business of the Company.
8.2 RESTRAINT
During the Restraint Period, the employee must not, in the Restraint Area:
(a)solicit or compete for the custom of, or accept business from, any person who was a customer of the Company at any time during the 6 months immediately preceding the termination of the Employee's employment with the Company for a business that is the same or similar to the business of the Company;
(b)solicit or endeavour to obtain the services of any professional person (either directly or indirectly) who was an employee, consultant or contractor of the company at any time during the 6 months immediately preceding the termination of the employee's employment with the Company; or
(c)engage in, be involved in or be associated with, or prepare to engage in, be involved in or be associated with, a business competing with the Business of the Company in the capacity of a principal, agent, director, employee, partner, majority shareholder or unit holder, joint venturer, trustee, beneficiary, contractor, advisor, consultant or in any other capacity.
8.3 ACCOUNT
The Company is beneficially entitled to any benefits which the Employee obtains as a result of breaching this clause and must account to the Company for those benefits.
8.4 ACKNOWLEDGEMENT
Each of the covenants and restraints in this clause constitutes an independent covenant and restraint separate in all respects from each of the other covenants and restraints notwithstanding the manner in which they or any of them are linked together or are grouped grammatically, and the invalidity of any one or more covenant or restraint shall not invalidate the other covenants or restraints. The Employee acknowledges that the covenants in respect of restraint of trade contained in this clause are:
(a)reasonable as to duration, type of activity and geographical area;
(b)reasonable and necessary to protect the proprietary and commercial interests of the Company;
(c)commensurate with the consideration the Employee will receive under this agreement; and
(d)the Company is relying upon this acknowledgement in entering into this Agreement.
8.5 EVIDENCE OF COMPLIANCE
The Company may require the Employee to provide a written declaration by the Employee on oath, or any evidence relevant in the circumstances, confirming to its satisfaction that he is not in breach of his obligations under this clause.
8.6 SEPARATE AND SEVERABLE RESTRICTIONS
Each restriction in clause Definitions and the areas that comprise the Restraint Area in clause Definitions a) are intended to be separate and severable. If any of these are found to be invalid or ineffective, but would be valid or effective if some portion were deleted, then such portions will apply with such modifications as may be necessary to make them valid or effective.
Mr Clay was required to sign a confidentiality agreement and did so on 20 August 2014. It is a term of the confidentiality agreement that it remains in force for the duration of employment of the recipient and for a period of two years after cessation of employment.
By a letter dated 2 February 2015, Mr Clay was offered and accepted (in writing) the position of project manager reporting to the production manager to commence on 1 February 2015. Pursuant to the terms of the written agreement, Mr Clay received an increase in salary and it was expressly agreed that all other employment terms and conditions would remain unchanged.
In or about March 2016, Mr Clay was transferred to the role of Royal Navy of Oman project manager. It was agreed that he would receive a project daily allowance for the duration of the project. It was also agreed the terms and conditions of his employment were otherwise to remain the same.
On or about 28 June 2016, Mr Clay became a Level 16 project manager and his salary was again increased. During the course of 2017, Mr Clay was identified as a top performer and future talent for the organisation. It is clear at least by this point in time Austal regarded him as hardworking and a highly valued employee.
On or about 14 July 2017, the defendant was offered the position of acting head of production. Initially the period was for six months. This position reported direct to Patrick Anthony Gregg, the chief operating officer of Austal. As a result, it was agreed that Mr Clay would receive an increase of a pro rata allowance on top of his salary. Otherwise the terms and conditions of his employment were to remain the same.
Mr Clay was carrying out the duties of the acting head of production when he resigned on 15 May 2018.
Mr Clay was part of Austal's tender submission team for the OPV project. An affidavit sworn by sworn by Mr Gregg on 11 June 2018, was read into evidence. In his affidavit, Mr Gregg states that Mr Clay was the nominated production lead for the OPV bid team and he was the lead author for the following key chapters in the formal OPV tender response:[3]
41.The defendant was part of the core Austal‑Fassmer tender submission team for the OPV Project (the OPV Bid Team). He was the nominated production lead for the OPV Bid Team and was the lead author for the following key chapters in the Formal OPV Tender Response:
(a)Business Resource Planning, which set out the number of people and roles required to deliver the work, split by trade;
(b)Facilities, which set out the facilities which would be required in order to build the vessels;
(c)Resident Personnel, which set out employees that Austal already had who were able to work on the project, together with their capabilities;
(d)Workforce, which set out the workforce Austal currently had, what Austal would need in terms of additional personnel and the expected fluctuations in workforce throughout the project;
(e)Shipbuilding Production Plan, which set out how Austal intended to construct the vessels; and
(f)Risk Management, which set out how Austal intended to manage the risks inherent in a project of this size.
[3] Affidavit of Patrick Anthony Gregg, sworn 11 June 2018, pages 13 ‑ 14.
Mr Gregg also deposes in his affidavit that in Mr Clay's role for the OPV bid team he:[4]
(a)developed strategies for workforce development, skills transfer and project transition between Adelaide (where two of the Offshore Patrol Vessels were to be built) and Henderson;
(b)was the nominated reviewer (by which I mean that the defendant was tasked with assessing the 'readability') of the following chapters of the Formal OPV Tender Response:
(i)Facility and information and communications technology (ICT) Systems Security, which set out security measures taken at Austal's facilities and put in place with respect to its ICT networks;
(ii)Quality System, which set out the quality assurance measures Austal has, and proposed to put in place; and
(iii)Work Health and Safety Management System, which set out Austal's workplace health and safety management system; and
(c)was involved in regular meetings between the Austal and Fassmer elements of the team, during which there was open discussion about every aspect of the Formal OPV Tender Response.
[4] Affidavit of Patrick Anthony Gregg, sworn 11 June 2018, page 14.
In Mr Gregg's affidavit he provides evidence about the classes of highly confidential information Austal contends Mr Clay had access to whilst employed by Austal. In summary, Mr Gregg states this information included:
1.In his capacity as working as a project manager for Austal, Mr Clay was required to complete a monthly report for each of the projects that he was working on for presentation at monthly meetings attended by Mr Gregg and the unit heads. Each monthly report contained detailed information with respect to the relevant project including:[5]
[5] Affidavit of Patrick Anthony Gregg, sworn 11 June 2018, pages 7 ‑ 8.
(a)analysis of how the project is tracking against internal and contractual performance indicators, including technical performance, cost, contract schedule and client expectations;
(b)the application of strategies in respect of minimising costs in the supply chain and procurement;
(c)financial performance of the project against forecasted gross margin, overhead and project profit;
(d)blue collar resourcing and rates of pay for trades;
(e)forward planning in respect of blue collar trades and engineering skills and how those resources are to be allocated and charged to the project;
(f)safety statistics and strategies to target and achieve lower injury rates;
(g)detailed analysis and comparison of the cost of the vessel build against the vessel price/budget;
(h)financial analysis of the application of opportunities and mitigation strategies in respect of production and efficiency; and
(i)analysis of production, operation and commercial risks of the project.
2.As a consequence of preparation of the monthly reports, a project manager and an assistant project manager have access to all of the information in the monthly reports. Austal regards this information as highly commercially sensitive and confidential to it. This information includes:
(a)wage rates applicable to a project, being the internal rate at which Austal pays its employees;
(b)productivity, being the rate at which Austal performs work;
(c)the identity of Austal's suppliers and their key contractual terms. This includes matters of pricing and the actual work carried out for Austal.
3.A project manager and any assistant project manager is also responsible for the production of:
(a)build strategy, being the strategy underlying the build process for each individual vessel. This involves breaking down the plan for the vessel that is to be built into parts, then the components of those parts, in order to identify down to the smallest detail what needs to be built in order for it to all fit together;
(b)scheduling, which involves taking the build strategy and breaking it down further in order to put a plan in place, including assigning roles and timeframes; and
(c)capacity, which relates to where you place parts in the shipyard that are required to build the vessel. It is generally only the project manager, any assistant project managers and Mr Gregg and the unit heads that have the overall picture. Information concerning Austal's capacity plans is confidential and valuable because it dictates, to a considerable degree, the ability of Austal to tender for particular jobs. For example, if a competitor knows that Austal will lack capacity due to existing commitments, it will be aware that Austal is unlikely to tender for work which it could not accommodate due to capacity constraints. Similarly, if a competitor knew that Austal had the capacity to undertake the work, it would be aware that Austal is likely to tender for that work. Given that there are only a handful of shipbuilders in Australia, knowing whether or not Austal is likely to tender for a job would be of considerable value to a competitor when that competitor comes to pricing its tender.
Mr Gregg says that all of this information would be of advantage to a competitor for the following reasons:[6]
The value to a competitor of the information known to employees in the roles of Project Manager, Assistant Project Manager and Unit Head is in its combination with other categories of information. For example, whilst information concerning wage rates, productivity and suppliers is confidential and would be useful for a competitor in and of itself, the combination of these categories of information would enable a competitor to predict or estimate, to a considerable degree of accuracy, how much it will cost Austal to build or sustain a vessel. The accuracy of such calculations would be increased with knowledge of the build strategies, schedules and capacity plans of Austal. For example, knowledge of how long Austal considers it will take to complete each part of the vessel's construction (taken from the schedule) and what resources Austal plans to commit to the construction at that time (taken from the build strategy) would enable a competitor to use information concerning Austal's wage rates, productivity and suppliers to predict how Austal would price similar work.
[6] Affidavit of Patrick Anthony Gregg, sworn 11 June 2018, page 10 [27].
As to the information Austal says that Mr Clay obtained because of his role in the OPV bid team, Mr Gregg claims on behalf of Austal that this information would be of particular value to Civmec because:[7]
The defendant's role in the OPV Bid Team gave him access to the complete records for the Formal OPV Tender Response, including the final response itself. The information in those records and the Formal OPV Tender Response was and remains sensitive, confidential and commercially relevant. It constitutes all of the core information about Austal's business that a competitor, particularly one just entering the industry such as Civmec, would want to know in order to compete with Austal. Further, the defendant's knowledge of Austal's Formal OPV Tender Response, built on Austal's extensive expertise and experience, would be valuable to Civmec, being the successful tenderer, in the delivery of its first shipbuilding project with an increased level of efficiency. It contains all of the information that Austal will need to include in all tenders for Commonwealth Government work moving forward, both with respect to the production of new vessels and sustainment.
[7] Affidavit of Patrick Anthony Gregg, sworn 11 June 2018, page 14 [43].
Austal is currently preparing a tender response for the sustainment contract for the OPV construction contract. It anticipates that the tender response for this contract will be requested within the next three months and submitted three months thereafter. Mr Gregg says all the information which Mr Clay has had to access with respect to the formal OPV tender response whilst employed by Austal is directly relevant and valuable to any competitor of Austal who intends to submit a tender for this work, including Civmec.
The defendant's contentions with respect of his employment with Civmec
In an affidavit sworn on 13 June 2018, Mr Clay deposes that he will be working exclusively on the OPV project for Civmec. In his role as project manager for the OPV project he says he will be following Luerssen's predetermined design and process.
Mr Clay deposes that he will not be involved in any marketing or business development, tendering for work (in the naval market or otherwise), or in improving Civmec's internal processes or systems. He also states that he has advised Civmec of his obligations to Austal in respect of its confidential information and that he intends to observe those obligations.
Mr Clay claims that he has limited knowledge of Austal's clients or confidential information and that such information will not be relevant, applicable or useful in the performance of work for Civmec because all processes, methods and procedures of the OPV project have already been determined.
In any event, any limited knowledge that he has he says will not be relevant, applicable, or useful in his position at Civmec because for at least the next six months he will be working on the OPV project for which the design and all systems have already been determined.
Mr Clay does not deny that throughout his employment with Austal he has had access to confidential information. However, he disputes the complexity, the level and detail of confidential information Mr Gregg contends that he has had the use of during his employment with Austal.
Mr Clay argues that at the time he commenced employment with Austal, he was employed in a low‑level manager position. He states that there were no discussions when he was first employed that he would progress to the position of acting head of production, or any other position, or that over time there would be any associated increase in his access to Austal's confidential information. In any event, he says his need to access Austal's confidential information to perform work for Austal was infrequent, superficial and varied. He claims his ability to remember confidential information of Austal is 'next to none'. He says to the extent that he can remember any information it is not detailed and not specific. For example, he can remember lengths of ships, but no other details of ship designs.
Mr Clay has not taken, disclosed or used any of Austal's confidential information or client contacts for personal or commercial gain or for the benefit of Civmec.
Mr Clay concedes that in his roles at Austal he had knowledge of Austal's general build strategy but says he cannot remember the specific build strategy for particular vessels and says that unless you are building the same vessel twice, knowledge of build strategy is irrelevant and cannot be replicated.
Mr Clay also points out that he had limited interaction with Austal's clients. He has never known all of Austal's clients and they do not know him. He says it was never part of any of his roles to attract or secure work or do marketing and sales.
Mr Clay claims that he had limited interaction with suppliers because all Austal's suppliers are managed through the supply chain department and the only detailed interaction he had with the supply chain was when he worked on the Royal Navy of Oman project when he addressed issues in contract delivery if they came to a head. Mr Clay, however, concedes that during the last 12 months of his employment he accessed Austal's ERP system to approve large purchase orders valued at over $50,000 and that there is a list of suppliers on that system. He says however, he could not list all of them because Austal used 1,500 suppliers.
Mr Clay also concedes that he had access to the drawings database. This is a database that every Austal employee has access to and it contains a list of drawings that make up various types of vessels. He accessed this database approximately once a week to check the general arrangement of a vessel, to check the shed fit drawing and to look at the size of each unit. Consequently, he is able to remember general but not specific information contained in drawings. This is because the drawings would change on a regular basis.
During the last 12 months of his employment at Austal, Mr Clay had access to various drives that keep information relevant to different sections of Austal's operation. Austal has approximately 40 drives and he had access to eight. These were health and safety environment and quality, three project management drives, planning, production, fabrication and business management.
Mr Clay accessed the project management drives approximately once a month during the last 12 months of his employment and whilst he was a project manager he accessed these drives on a daily basis to manage issues, create invoices, issue variations or contract change proposals.
Mr Clay also accessed the planning drive approximately once a month and the production drive on a daily basis. On the production drive he kept various forms for recruitment, resource planning, any supervisor training courses and general administration. He accessed the fabrication drive rarely. He said he did not do so in the last two years because it was of no relevance to him. He said that all the information on that drive was highly technical and he has no ability to recall it.
Mr Clay accessed the business management drive approximately once on a monthly basis to look at vessel budgets. The drive includes budgets and the vessel forecasts. He said there were approximately 150 lines and he can only remember this information from a high‑level, that is, the total cost of a vessel but not the breakdown.
Mr Clay had access to the production efficiency metrics which were reported on a weekly basis by the planning department. This information was sent out by email to the entire workforce and printed out and put on the noticeboard. He said his knowledge of hourly rates and production could enable him to give an estimate of the labour rate, however, this was only 30%, of the costing. He said the other 70% of the cost of production is related to material and he could not estimate that.
Throughout Mr Clay's employment with Austal he had access to their business management system. He states that every employee at Austal has access to the system and he would access this on approximately a weekly basis for various matters, including checking and approving processes, or to request and recruit, or to access capital expenditure forms. Mr Clay also helped facilitate facility investment options for Austal's Henderson facility to include considerations as to whether they would need to build a new shed and what sort of cranes they should use and what would the layout be.
Mr Clay was also exposed to sales pipeline information whilst acting in the position of head of production. This information was provided to him during lead team meetings held every four to six weeks. These were meetings he attended with the CEO, the sales team and other heads of department. At these meetings the sales team would present potential projects for Austal globally. The majority of the information related to the aluminium ferry market because this has been Austal's prime market for the past 30 years. Although the OPV project was considered in the data presented at the meetings he attended, the presentation of the data was given when Austal was waiting for the Commonwealth to announce the successful tenderer. The only other naval defence sector opportunity discussed when he attended these meetings was a possible contract for patrol boats in an Asian country. Mr Clay claims he cannot recall any information discussed at these meetings relevant to an extent it would be useful to a competitor as it was too high‑level and too much time has passed.
In opposition to the application for grant of the interlocutory injunction, an affidavit made by Kevin James Deery, sworn on 13 June 2018, was also read into evidence together with the affidavit of Mr Clay. Mr Deery is the chief operating officer of Civmec.
Mr Deery deposes that Civmec's current scope of work in the shipbuilding industry is to perform work on the OPV project as a subcontractor for Luerssen Australia. He says that this is the only project they are currently executing in the shipbuilding market. He also states that whilst Civmec has expressed interest in a number of future projects in the naval shipbuilding industry, those particular projects have not yet reached the stage of being issued for tender to them and he does not expect any of these projects to come to fruition until after 2021.
Mr Deery describes the scope of the works for the OPV project by Civmec as follows:
(a)The original intent of the tender was that Civmec/ASC joint venture would have an integrated team and complete the entire build (apart from weapons and communications). However, a significant portion of the work fell away as Luerssen elected to subcontract portions of the work directly. Consequently, they were no longer required to supply or install engines, conduct the sea trials, or complete the fit out.
(b)Civmec's current scope of work for the OPV project is to supply steel and piping materials for all 12 OPVs. For the first two OPVs it will cut and form steel and piping for supply to ASC in Adelaide. The remaining 10 vessels are to be constructed in Henderson, commencing in April 2020.
(c)For the first 18 months of the OPV project, Civmec employees will be involved in the supply of steel to South Australia. Civmec's project team will instruct the Civmec workforce in accordance with the information and instructions provided by Luerssen about the requirements of what has to be cut and sent to ASC. ASC will direct, via Luerssen, Civmec in terms of the schedule that the steel has to be delivered to suit the build methodology and sequence determined by Luerssen and ASC.
(d)The method Civmec will be using to cut the steel will be no different to the method that they used to cut steel in any other project for any other industry.
Mr Deery states the scope of Mr Clay's work on the OPV project will be as follows:
(a)For the first 18 months his work will be limited to managing the cutting and forming of steel plates and cutting and bending of pipes in accordance with predetermined designs. During this period he will be responsible for management of procurement, cutting, and delivering of the steel in accordance with ASC's required build schedule.
(b)The man hours and workforce skills required for the initial 18 months of the OPV project will be sourced from Civmec's existing workforce. Mr Clay and any knowledge he may have of Austal's confidential information in this regard cannot influence this.
(c)Civmec has a prescriptive procurement process to secure suppliers. Mr Clay will be required to follow Civmec's standard procurement procedure. This will involve obtaining multiple quotes for each item utilising Civmec's approved supplier listing and providing recommendations based on those quotes. Civmec currently have approximately 2,500 operational suppliers that they procure supplies from. As part of the procurement procedure, Mr Clay will be interacting with these suppliers.
Mr Deery also deposes that Civmec is prepared to offer an undertaking to the court that Mr Clay's employment will be limited to this role. Civmec is also prepared to offer an undertaking to the court that throughout his employment Mr Clay will not be required or asked to use, or disclose, any of Austal's confidential information. It also will issue Mr Clay with an express written direction not to disclose any of Austal's confidential information.
In Mr Deery's affidavit he states that whilst on 26 May 2018 Civmec announced that they intended to form a new joint venture company with Luerssen called Australian Maritime Shipbuilding and Export Group, the intent of this company is to transfer ship design and shipbuilding skills and expertise from Luerssen to Civmec. However, Mr Clay is not employed by this company, nor is there any plan for him to be employed by that company.
Relevant principles ‑ the grant of an interlocutory injunction
The principles in relation to interlocutory injunctions were set out by Beech J in Twinside Pty Ltd v Venetian Nominees Pty Ltd.[8] They are:
(a)whether there is a serious question to be tried or a prima facie case, in the sense that if the evidence remains as it is there is a probability that at the trial of the action the plaintiff will be entitled to relief;
(b)whether the plaintiff will suffer irreparable injury for which damages will not be an adequate compensation unless an injunction is granted; and
(c)whether the balance of convenience favours the granting of an injunction.
[8] Twinside Pty Ltd v Venetian Nominees Pty Ltd [2008] WASC 110 [7] ‑ [11].
In Castlemaine Tooheys Ltd v South Australia, Mason ACJ pointed out that the degree of likelihood of success is a factor related to the balance of convenience and that it might be that a probability, or even a distinct probability of success, might be needed to be shown if the injunction might adversely affect the public interest.[9] The two questions are not independent of each other and an apparently strong claim may lead a court more readily to grant an injunction where the balance of convenience if fairly even, or a claim of less strength which nevertheless raises a serious question to be tried may attract interlocutory relief where there is a marked balance of convenience in favour of it.[10]
[9] Castlemaine Tooheys v State of South Australia (1986) 161 CLR 148, 154.
[10] Bullock v Federated Furnishing Trades Society of Australasia (No 1) (1985) 5 FCR 464, 472.
In Twinside Pty Ltd v Venetian Nominees Pty Ltd, Beech J explained this point as follows:[11]
As the apparent strength of the applicant's case diminishes, the balance of convenience moves against the making of an order: Glenwood Management Group Pty Ltd v Mayo [1991] 2 VR 49, 54 - 55; Todd v Novotny [2001] WASC 171. The grant of an injunction involves balancing the injustice which might be suffered by the defendant if the injunction is granted and the plaintiff later fails at trial, against the injustice which might be suffered by the plaintiff if the injunction is not granted and the plaintiff later succeeds at trial: Films Rover International Ltd v Cannon Film Sales Ltd [1987] 1 WLR 670; Madaffari v Labenai Nominees Pty Ltd [2002] WASC 67 [14].
[11] Twinside Pty Ltd v Venetian Nominees Pty Ltd [2008] WASC 110 [11].
Restraint of trade clauses - general principles
The principles concerning the enforceability of restraint of trade clauses were set out by Edelman J in Emeco International Pty Ltd v O'Shea [No 2].[12] Justice Edelman summarised these principles in Workplace Access and Safety Pty Ltd v Mackie as follows:[13]
It is not necessary to set out in detail the principles concerning the enforceability of restraint of trade clauses. I discussed those matters in Emeco International Pty Ltd v O'Shea (No 2). In broad summary, they are as follows.
(1)As Lord Macnaghten said in Nordenfelt v The Maxim Nordenfelt Guns and Ammunition Co Ltd:
'[I]t is the only justification, if the restriction is reasonable ‑ reasonable, that is, in reference to the interests of the parties concerned and reasonable in reference to the interests of the public, so framed and so guarded as to afford adequate protection to the party in whose favour it is imposed, while at the same time it is in no way injurious to the public.'
(2)The onus of proof is on Workplace to show that the restraint of trade clause in the employment agreement is reasonable as between the parties.
(3)The question of reasonableness is determined at the date of the contract, although subsequent developments can be considered to determine whether the agreement was reasonable to make at the date of contract, having in mind the best estimate that the parties could make for the future.
(4)A restraint is reasonable in relation to the restraining party if it is necessary for the adequate protection of a legitimate interest of that party and reasonable in relation to the party restrained if it preserves the fullest liberty of action consistent with that protection.
(5)The legitimate interests about which a restraint is commonly justified is customer connection and confidential information. A restraint may be justified as protecting more than one legitimate interest.
[12] Emeco International Pty Ltd v O'Shea [No 2] [2012] WASC 348 [66] ‑ [70].
[13] Workplace Access and Safety Pty Ltd v Mackie [2014] WASC 62 [40].
Consequently, the first question to be determined in this matter is whether Austal has demonstrated a serious question to be tried or put another way made out a prima facie case that the restraint in cl 8.2 of Mr Clay's contract is reasonable and enforceable.
Although contracts in restraint of trade are presumed to be contrary to public policy and therefore void, they may be justified by the special circumstances of the particular case.[14]
[14] Nordenfelt v Maxim Nordenfelt Guns & Ammunition Co Ltd [1894] AC 535, 565; Peters (WA) Ltd v Petersville Ltd (2001) 205 CLR 126 [37].
On the evidence presently before the court, I am not satisfied that Austal has made out a prima facie case or that there is a serious question to be tried that cl 8.2(a) of the restraint clause is reasonable and enforceable. This clause can be described as a non‑solicitation restraint. Clause 8.2(a) captures 'any person who was a customer of the Company at any time during the 6 months immediately preceding the termination of the Employee's employment'. As pointed out on behalf of Mr Clay, there is no limitation in the restraint by reference to any connection to or dealings with the customers Mr Clay has or could reasonably be expected to have knowledge of. The non‑solicitation restraint seeks to restrain Mr Clay in respect of customers he not only had no dealings with but of whom he may have no knowledge. The risk of inadvertent breach of the restraint clause in these circumstances could be said to be demonstrative of unreasonableness, in that it demonstrates that the restraint goes further than is necessary to protect the legitimate interests of the former employer. In particular, it may be unreasonable for an employee of a very large company to be expected to know with certainty all of the past customers of the employer.
I am of the same opinion in respect of the restraint in cl 8.2(b). This clause seeks to prohibit Mr Clay from soliciting or endeavouring to obtain the services of any professional person (either directly or indirectly) who was an employee, consultant or contractor of the company at any time during the six months immediately preceding the termination of Mr Clay's employment with the company. Given the size of Austal's business it may be unreasonable for an employer to expect an employee to know with certainty the identity of all of its consultants and contractors.
It is for a plaintiff to demonstrate that the restraint of trade provisions are reasonable.[15] In determining whether a restraint is reasonable, it is necessary to identify the interests of the plaintiff which it seeks to protect and the effect of the contract by which the plaintiff seeks to achieve that result. Thus, the onus is on the party relying upon the restraint to prove the restraint is reasonable in the interests of the parties.
[15] Herbert Morris Ltd v Saxelby [1916] 1 AC 688, 700.
In this matter, Austal puts forward a submission that the non‑compete restraint in cl 8.2(c) (which prohibits Mr Clay to 'engage in, be involved in or be associated with, or prepare to engage in, be involved in or be associated with, a business competing with the Business of the Company in the capacity of … employee') is legitimately reasonable to protect and avoid the use of its confidential information. It is not in dispute that this is a legitimate objective.
In Smith v Nomad Modular Building Pty Ltd,[16] the Court of Appeal dismissed an appeal against a decision of Master Sanderson granting an injunction to enforce a restraint of trade clause in the form of a non‑competition clause contained in an employment agreement made between the parties. Her Honour, McLure JA (with whom Buss JA agreed), found the proper course in such a case is to examine the range of interests relied upon by the employer said to require protection and to determine whether one or more of those interests are reasonable by reference to the interests of the parties to the contract and the interests of the public.[17] In the matter before the Court of Appeal the interest was said to be the protection of confidential information and the protection of the good will of the business.
[16] Smith v Nomad Modular Building Pty Ltd [2007] WASCA 169.
[17] Smith v Nomad Modular Building Pty Ltd [2007] WASCA 169 [12].
In considering whether a restraint clause is reasonable, there are two aspects of the public interest. In Willhart Ltd v Samimi, Hasluck J explained:[18]
The central dilemma in this area of the law was aptly expressed by Gleeson CJ in Wright v Gasweld Pty Ltd (1991) 22 NSWLR 317 at 334. His Honour noted that there was a tension between two competing considerations of public policy. An employer is not entitled to protect himself against mere competition by a former employee. The corollary is that the employee is entitled to use skill, experience and know-how acquired in the service of the former employer in legitimate competition. It is in the public interest that this should be so. At the same time, the law will protect trade secrets and confidential information, and will intervene to prevent their misuse.
[18] Willhart v Samimi [2000] WASC 239 [99].
Whilst an employer is not entitled to be protected against mere competition, an employer with legitimate interests is entitled to restrain an employee from taking competing employment for a set time that is reasonable as to the time and geographical extent.
Austal says its case falls squarely within the principle first espoused by Lord Denning in Littlewoods Organisation Ltd v Harris.[19] In Littlewoods, Lord Denning observed:[20]
It is thus established that an employer can stipulate for protection against having his confidential information passed on to a rival in trade. But experience has shown that it is not satisfactory to have simply a covenant against disclosing confidential information. The reason is because it is so difficult to draw the line between information which is confidential and information which is not: and it is very difficult to prove a breach when the information is of such a character that a servant can carry it away in his head. The difficulties are such that the only practicable solution is to take a covenant from the servant by which he is not to go to work for a rival in trade. Such a covenant may well be held to be reasonable if limited to a short period. That appears from the judgment of Cross J in Printers & Finishers Ltd v Holloway [1965] 1 WLR 1, 6:
'Although the law will not enforce a covenant directed against competition by an ex‑employee it will enforce a covenant reasonably necessary to protect trade secrets … If the managing director is right in thinking that there are features in the plaintiffs' process which can fairly be regarded as trade secrets and which their employees will inevitably carry away with them in their heads, then the proper way for the plaintiffs to protect themselves would be by exacting covenants from their employees restricting their field of activity after they have left their employment, not by asking the court to extend the general equitable doctrine to prevent breaking confidence beyond all reasonable bounds.'
[19] Littlewoods Organisation Ltd v Harris [1977] WLR 1472. Applied in Nomad Modular Building Pty Ltd v Smith [2007] WASCA 117; Emeco International Pty Ltd v O'Shea (No 2) [2012] WASC 348; DP World Sydney Ltd v Guy [2016] NSWSC 1072; (2016) 262 IR 156.
[20] Littlewoods Organisation Ltd v Harris [1977] WLR 1472, 1479.
In assessing reasonableness, regard should also be had to cl 8.4 of the contract. Pursuant to cl 8.4, Mr Clay expressly acknowledged that:
(a)the covenants in respect of restraint of trade contained in cl 8 are reasonable as to duration, type of activity and geographical area;
(b) the covenants are reasonable and necessary to protect proprietary and commercial interests of Austal;
(c)the covenants are commensurate with the consideration Mr Clay will receive under the agreement; and
(d)Austal is relying upon the acknowledgement and entering into this agreement.
Whilst the express acknowledgement in cl 8.4 is relevant, I do not, however, regard the acknowledgement as material as it is clear it cannot be said that when the parties entered into the contract of employment that the parties contracted at arm's length. When Mr Clay entered into the contract of employment he was engaged to work in the position of assistant project manager which on either view of the facts put forward on behalf of Austal and Mr Clay can be properly described as a junior middle management role. Consequently, I accept that at the time of entry into the employment contract Mr Clay's position was not particularly senior, with no prior experience in the shipping industry.
It is contended on behalf of Austal that it is open to the court to find that on each occasion Mr Clay was promoted, a new contract of employment was entered into. Thus, it is said that if this proposition is accepted, the validity of the restraint is to be decided by the court as at the date of the last occasion on which a new contract of employment was entered into by Mr Clay. This is said to have occurred on 1 February 2015 when Mr Clay was appointed to the position of project manager.
It is not necessary to conclusively determine this issue in determining whether an interlocutory injunction should be granted. I observe, however, in light of the express words of cl 2.1 of the contract which provides that Mr Clay was to be employed as an assistant project manager or in any other position that may be agreed in writing between Austal and Mr Clay from time to time, the efficacy of the argument put forward on behalf of Austal is in doubt.[21]
[21] See the discussion by Edelman J in Workplace Access and Safety Pty Ltd v Mackie [2014] WASC 62 [29] ‑ [35].
It is argued on behalf of Mr Clay that cl 8.2(c) does not protect any legitimate interest of Austal. It is said that he signed a standard form employment contract in respect of which he took no legal advice, and did not consider he was in the position to negotiate its terms.
Whilst it is conceded that in the role of assistant project manager Mr Clay had access to confidential information, it is argued that it does not follow that access to confidential information resulted in Mr Clay acquiring that confidential information as much of the data he consulted was highly technical and detailed. In particular, it is contended that:[22]
[22] Defendant's outline of submissions filed 13 June 2018, pages 8 ‑ 9.
43.However, regardless of whether Mr Clay did have access to all of the information Austal says he did, and regardless of whether that information can be properly characterised as 'confidential information', Mr Clay says, in summary that:
(a)the multiple changes in his position during his employment with Austal, coupled with his relatively short employment of 3 years, 9 months, meant that his exposure to any confidential information was so varied, irregular and superficial that it is not information that can be 'carried away in his head' to an extent that it could be used by a competitor to Austal's detriment;
(b)he was not a part of Austal's Business Development Team, he has no knowledge of Austal's marketing strategy or activities ‑ marketing and business development were not part of his role;
(c)he did not know all of Austal's customers, and they did not know him;
(d)his customer interaction was limited to two discrete periods during his employment with Austal;
(e)he has not taken, disclosed or used any of Austal's confidential information. It is noted that Austal does not at all assert that Mr Clay has done so;
(f)he has advised Civmec of his contractual obligations regarding confidentiality in clause 6 of the Employment contract, and of his intention to observe them; and
(g)in any event, even if the court was persuaded of a risk that Mr Clay could in fact carry away Austal's confidential information such that it could be used to Austal's detriment, he has been employed to work solely on the OPV Project (a project in which Austal has no involvement) and his scope of work for the first 18 months of his employment with Civmec will be limited to managing the cutting and forming of steel plates and cutting and bending of pipes in accordance with pre‑determined designs.
(h)Civmec will not require Mr Clay to use or disclose Austal's confidential information and will in fact issue him with an express direction not to do so.
Thus, it is put that the nature of Mr Clay's access to Austal's confidential information means that his ability to remember it would not be useful to a competitor. In particular, it is said that the nature of Mr Clay's access to Austal's confidential information, and his consequent inability to retain it to the extent that it would be useful to a competitor, distinguishes his circumstances from those cases where a prima facie case for establishing enforceability, or enforceability itself, have been found.
It is also said that whilst Mr Clay was asked to sign a confidentiality agreement, this should not be considered indicative of a reasonable expectation that he would be exposed to any greater level of confidential information in the future, as this was Austal's general practice for all employees.
Consequently, an argument is put that the court should conclude that Austal's legitimate interest in protecting its confidential information is adequately protected by a combination of the confidentiality clause in the employment contract, the confidentiality agreement and Mr Clay's common law and equitable obligations in respect of Austal's confidential information. Further, it said that protection is further afforded by the undertakings that both Mr Clay has given and Civmec is prepared to provide in respect of Austal's confidential information.
It is pointed out on behalf of Austal that if a restraint clause in a contract is not invalid it would not be proper to refuse injunctive relief because the ex‑employee now does not have documents which contain specific information and where the ex‑employee says he does not recall the details. In DP World Sydney Ltd v Guy White J made this point, and observed that the words of Megaw LJ in Littlewoods are apposite.[23] In Littlewoods, Megaw LJ said:[24]
It is, I think, clear from the judgment of Cross J in the case to which Lord Denning MR has already referred, Printers & Finishers Ltd v Holloway [1965] 1 WLR 1 that it is appropriate that a covenant, restricting an employee from full freedom of taking other employment when he leaves his existing employment, should be included in the contract of employment where there is a real danger that the employee will in the course of that employment have access to and gain information about matters which could fairly be regarded as trade secrets; and that applies even though the information may be carried in his head and even though (perhaps, particularly though) it may be extremely difficult for the employee himself, being an honest and scrupulous man, to realise that what he is passing on to his new employers is matter which ought to be treated as confidential to his old employers.
[23] DP World Sydney Ltd v Guy [2016] NSWSC 1072 [49]; (2016) 262 IR 156.
[24] Littlewoods Organisation Ltd v Harris [1977] 1 WLR 1245, 1485.
As Master Sanderson pointed out in Nomad Modular Building Pty Ltd v Smith in the matter before him, whilst there was no suggestion that the defendant would solicit the plaintiff's customers or use information, know‑how or the like gained whilst in the plaintiff's employ to further the interests of his new employer, there must be risks that he would do so and that was not to doubt the integrity of the defendant.[25] In Nomad Modular Building Pty Ltd v Smith, the new employer wished to develop its business in a new market and the employee had acquired knowledge of that market whilst working for the plaintiff. In these circumstances, the Master found that it was not practical to suggest that the employee would not put that information to use to favour his new employer and potentially damage the previous employer.
[25] Nomad Modular Building Pty Ltd v Smith [2007] WASC 117 [36].
Leaving aside the factual dispute between the parties that the position of Mr Clay in Austal was reasonably senior or not, I am satisfied that there is plausible evidence that (whilst he may not be able to recall specific details of particular plans, strategies and costs of building particular ships) Mr Clay acquired knowledge of the way in which Austal constructs its business pricing and the way in which Austal deals with purchasing and its strategies in tendering for work.
It is not in dispute that Mr Clay attended monthly meetings with the CEO and other senior management employees of Austal up to time of his resignation. From these meetings, Mr Clay would be aware of the work Austal had recently tendered for and is contemplating tendering for in the near future. Plainly, he had access to the costs of Austal's production and discussions at a very high level about future work Austal intends to seek.
I am satisfied that the information to which Mr Clay had access to, and became known to him, is confidential information, if disclosed, could be used by a competitor of Austal to predict or estimate, how much it would cost Austal to build or sustain a vessel. This information could be useful to a competitor, particularly one who is entering the same market as a new entrant and be invaluable to it to tailor its own tenders to compete against Austal for work.
In these circumstances, I am satisfied that Austal has demonstrated a prima facie case (or that there is a serious question to be tried) that the restraint in cl 8.2 is reasonable and enforceable. I have reached this conclusion solely on the basis of the evidence put before me for the purpose of the interlocutory injunction application. Needless to say, the question of the validity and enforceability of the restraint clause will fall for determination at the trial on the basis of whatever evidence is advanced.
Whilst I have expressed a view that cl 8.2(a) and (b) may not be enforceable, it is not necessary for me to read a concluded opinion. For reasons that follow, it is not necessary to consider these provisions of the restraint clause in making an interim order.
Balance of convenience
Austal submits that there are two matters that favour the grant of an interlocutory injunction. Firstly, it says that to deny it relief would deprive it of the benefit of the contractual restraints, in particular cl 8.2(c) in relation to which it says it has a strong arguable case that that clause is valid in protection of its confidential information.
Secondly, Austal points out that it is a rare case in which relief will be declined on the basis that damages are a sufficient remedy.[26] This is because damages are often inadequate in employment confidentiality matters where there is difficulty of detection of breaches of post‑employment obligations. There is also difficulty in establishing causation between the loss of business of customers and any actions of an ex‑employee. Further, there can be difficulty in the calculation of the quantum of any damage arising from the loss of business.[27]
[26] Emeco International Pty Ltd v O'Shea [2012] WASC 282 [20].
[27] Emeco International Pty Ltd v O'Shea [2012] WASC 282 [21], applying Huhtamaki Australia Ltd v Botha [2004] NSWSC 386 [17] (Hamilton J).
In this matter, it appears that the mischief to which Austal is concerned, is that if there is a breach of the confidentiality obligations that any such breach (whether intentional or not) by Mr Clay would involve a claim for the loss of chance of obtaining a contract for work following a tender for work in the shipbuilding industry. Where a case involves a loss of a chance it can be difficult to establish causation between the loss of business and the actions of the ex‑employee and there may be difficulty in assessing the calculation of quantum of any damage arising from the loss of business.[28]
[28] See observations made by Edelman J in Emeco International Pty Ltd v O'Shea [2012] WASC 282 [22].
It is also pointed out on behalf of Austal that any hardship to Mr Clay has come about because he is the author of his own misfortune in going to work for a competitor in defiance of a contractual constraint and that an employee who pursues such employment despite the terms of a known constraint runs the risk of enforcement of the restraint.[29] Whilst Mr Clay accepts this principle, it is claimed that this is not what Mr Clay has done. It is said that Mr Clay believed on reasonable grounds that taking up employment with Civmec would not fall foul of the restraint clause in his contract as the OPV project had been won by Civmec and it was clear that there would be no further role for Austal in that project. Further, it was clear by the date of Mr Clay's resignation that there was no competition for the OPV project work to which Mr Clay is confined in his work for Civmec, for at least a period well beyond the duration of the constraints.
[29] Robert Half Australia Pty Ltd v Cross [2013] WASC 182 [33].
Although Mr Clay acknowledges the difficulty associated with detecting breaches of continuing obligations not to misuse an employer's confidential information, he points out that his role with Civmec for the first 18 months will be limited to managing the cutting and forming of steel plates and the cutting and bending of pipes in accordance with predetermined designs. Further, he states that he will have no involvement in assisting Civmec to tender for work and that these factors reduce the relevance of any of Austal's confidential information to his role and result in there being no realistic ability for him to make use of Austal's confidential information to its detriment.
Mr Clay also contends that to the extent that the court is persuaded of a risk of his ability to carry away Austal's confidential information in his head, that information is not relevant to the role he will be performing at Civmec. Further, there is no evidence that Mr Clay has removed Austal's confidential information and Austal does not contend that he has.
In his affidavit, Mr Clay also sets out the effect of these proceedings on his family and says he will suffer financial hardship if an injunction is granted. He is the main financial provider for his family. His partner works part‑time as a kindergarten teacher and earns $1,910.96 net per fortnight. He has two young children who are aged 11 and 9. Mr Clay and his partner have significant financial responsibilities including mortgage repayments of $611 per week, a car loan repayment of $196.35 per week and another car loan of $809.95 per month and private school fees of approximately $9,500 per annum. Attached to Mr Clay's affidavit is a spreadsheet estimating the Clay family expenses on a weekly, monthly, bi‑monthly, quarterly and annual basis. Mr Clay's partner's income is insufficient to meet these expenses and he says his family cannot support their financial responsibilities unless he is in work.
In the event the injunction is granted and Mr Clay is restrained from working for Civmec he says he will be under significant pressure to find alternative work. He has made attempts to find alternative work which has revealed he has limited prospects. His only experience prior to working for Austal is when he worked for Ocean Technix which was a business originally owned by his father which he later took over as managing director. It is no longer an operational business and when he left Ocean Technix he found it extremely hard to find another job and had been looking for four months by the time he commenced employment with Austal. Ocean Technix performed work in the oil and gas industry and his experience and value as a prospective employee in this industry has expired, as have any contacts he may have once had in this industry that could help him find a job. Mr Clay anticipates that if he is required to look for work outside the shipbuilding industry it would take him between three and six months to find a job and he anticipates it would involve a significant pay cut.
Mr Deery says in his affidavit that if Mr Clay is restrained from working at Civmec for a period of six months, it is possible that Civmec would not be able to hold the position as project manager on the OPV project open for Mr Clay. To enable Civmec to deliver the OPV project according to the required schedule they would likely have to fill the position of project manager. Consequently, if Civmec were to hold the position of project manager open for Mr Clay for six months this would cause significant disruption to Civmec's delivery of the OPV project.
Whilst any injunction relief could result in significant hardship on Mr Clay, I am satisfied that the balance of convenience favours an interim injunction when regard is had to the following matters:
(a)Mr Clay commenced employment with Civmec on 11 June 2018.
(b)Austal is currently preparing a tender response for the sustainment contract for the OPV contract. It anticipates that the tender response for this contract will be requested within the next three months and submitted three months thereafter.
(c)Mr Deery has not directly or squarely denied (on behalf of Civmec) that it will not seek to tender or prepare for tendering for any shipbuilding work within the next six months and has not definitively stated Civmec will not hold Mr Clay's position open for six months or not employ him in any other business unit.
(d)To refuse an interim injunction could result in damage to Austal's business and a significant period of the restraint period passing before there is a trial of the matter.
(e)Civmec is a direct competitor of Austal and has hired Mr Clay, who was Austal's acting head of production, and who has current knowledge of Austal's confidential operations.
(f)Irrespective of Mr Clay's honourable intentions, there is a real risk that Mr Clay could reveal confidential commercial information of Austal.
(g)Austal is prepared to tailor an interim injunction order to enable Mr Clay to commence employment with Civmec to enable him to work in a business unit which does not prevent the opportunity for Mr Clay to perform work for Civmec in a part of Civmec's business that is not part of its business that directly competes with Austal.
For these reasons, I am of the opinion that an interim injunction should be issued to restrain Mr Clay from engaging in, being involved in or being associated with, the marine business of Civmec in the capacity of employee, contractor or any other capacity.
I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
VV
ASSOCIATE TO THE HONOURABLE JUSTICE SMITH18 JUNE 2018
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