Barrett & Ors v Ecco Personnel Pty Ltd

[1999] HCATrans 276

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Sydney  No S198 of 1998

B e t w e e n -

STEPHEN BARRETT, DEBORAH ROGERS and PARRAMATTA PERSONNEL PTY LTD

Applicants

and

ECCO PERSONNEL PTY LTD

Respondent

Application for special leave to appeal

GAUDRON ACJ
CALLINAN J

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON FRIDAY, 10 SEPTEMBER 1999, AT 2.38 PM

Copyright in the High Court of Australia

MR S.C. ROTHMAN, SC:   If the Court pleases, I appear with my learned friend, MR T. MOLOMBY, for the applicants.  (instructed by Clayton Utz)

MR J.T. GLEESON:   May it please the Court, I appear for the respondent.  (instructed by Corrs Chambers Westgarth)

GAUDRON ACJ:   Yes, Mr Rothman.

MR ROTHMAN:   Your Honour, the matter can be very shortly put.  The issue that is before the Court or sought to be brought before the Court in the appeal is a conceptual issue with which this Court has not, in our respectful submission, previously dealt.  The essence of the question is this:  if a former employee, subject to a post-employment restrictive covenant, restraining soliciting or enticing away is approached in a manner which is wholly unsolicited by a client of the former employer, can he or she respond?  In the matter that is before the Court - - -

GAUDRON ACJ:   Yes, he can respond consistent with the restraint by saying, “Well, I’m not free to do anything to encourage your business.”, can he not or can she not?

MR ROTHMAN:   Certainly, that is capable of being responded to in that way but, your Honour, with respect, a response other than that is not soliciting or enticing away.  The issue in the case before the Court is this, or the facts:  there is an unsolicited approach by the former client which was Nestle – sorry, the client of a former employer to the applicants to which the applicant responds in writing.  There was an invitation by that client to attend to make an oral presentation, which was accepted, and that oral presentation was the effective cause for the obtaining of the contract.  But it was done, on invitation.

GAUDRON ACJ:   And you say that is not soliciting?

MR ROTHMAN:   Yes, your Honour. 

If it is done on invitation, it is not soliciting.  We say, with respect, that there is no other point at which the line can be drawn for a former employee to deal in practice with a client of a former employer.  Leaving aside the almost wholly theoretical possibility of no negotiations as to terms and conditions of dealing, any dealing would then be an enticement or would be soliciting.  Because in the particular instance here in question the employee leaves.  Independently, knowledge comes to one of the managers of the client in which or by or through which the client then approaches the former employee and asks for a proposal.  It is not suggested
that the proposal that is given to the former client is different in the rates that are charged or anything else than is generally available to every other person that is a member of the public to whom the former employee seeks to advertise services.

There is, in our respectful submission, and indeed on the findings of the court, no evidence of soliciting prior to the invitation to make a proposal.  We say, the answer, that is the making of the proposal as a matter of concept, assuming that the response is within the ambit of the request that is made, that response must, in our respectful submission, not be soliciting or enticing away.  To make it soliciting or enticing away would be to interpret soliciting and enticing away in the area of post-employment restrictive convenants in a manner which makes it more onerous than in the case of an implied term on sale of business and the like.

GAUDRON ACJ:   What were they invited to do?  Make a presentation.  That is to say advance their own cause for obtaining work.

CALLINAN J:   Or to use Mr Justice Young’s language at page 8, the enticee or client, in making the presentation, made “things so attractive that the other party succumbs”.  It is about line 20.

MR ROTHMAN:   Yes, your Honour, but that is not, in our respectful submission – while the presentation was the final operative cause of the making of the arrangement, in any arrangement that is going to be the case.

GAUDRON ACJ:   Was there evidence as to what was said and done at the presentation?

MR ROTHMAN:   There is some evidence as to what is said and done in the presentation.  One of the issues in relation to which – and it is against me in that – is that one of the matters that was raised was the probability or possibility of the employment of the second applicant in the employ of the fourth applicant but otherwise - - -

GAUDRON ACJ:   Unless your proposition is correct as an absolute principle of law, then there is a difficulty about the evidence in this case, is that not right?  If you accept that a person might come along in response to an invitation and then actively solicit, then there is a difficulty about the evidence, is there not?

MR ROTHMAN:   In our respectful submission, no, although I have to say if the Court – and I opened with the proposition that it is ultimately a simple conceptual point and if the Court is against me, it is against me, but it is a simple conceptual point.  However, I do say this, that, for example – and I use this – if there was an invitation to give a quote or to make a presentation in relation to an aspect of the work and the presentation went beyond the aspect about which the invitation went, that clearly would be soliciting, at least in relation to the area beyond the invitation.  But we do say once an invitation is made to give a price, to say what the services are in relation to that - that is an unsolicited invitation - then an answer to that response is not soliciting.  It puts the former client or client of the former employer in precisely the same position as every other member of the public.

CALLINAN J:   But it may be that the effect of the prohibition is such that no meaningful response can be made to such an invitation without enticing away.

MR ROTHMAN:   And we say to that, your Honour, that - - -

CALLINAN J:   Just by being very good and being, in the example given by Mr Justice Young, very attractive, without saying a word.

MR ROTHMAN:   Yes, your Honour.  I certainly will not cavil with that, your Honour.  Your Honour, that would turn the non-solicitation provision into a non-dealing provision and we say, conceptually, they are different.  There are clauses that - - -

CALLINAN J:   No, you could have a dealing without any presentation at all.  It might simply be an engagement by the former customer without anything at all being done, without the other party making a presentation or doing anything at all.

MR ROTHMAN:   With respect, your Honour, in order for the contract to be formed, there would at least have to have been some presentation as to the cost of the services and - - -

CALLINAN J:   No, no, it could be simply a telephone call:  “How much are you prepared to charge to do X and Y?---$100 an hour.”  There would not need to be a presentation.  Presentations have become very fashionable.  They are only a form of promotion and advertising.  It happens all the time.  I mean, everybody wants to do a promotion.  They want to do it because they want to do business with you.

MR ROTHMAN:   Your Honour, in our respectful submission, in order for it to be soliciting, the initial contact in relation to the work for which there was an attempt to do business on – dreadful grammar, but nevertheless - for it to be soliciting, the initial contact and searching out must be done by the employee in question and not by the client and that really is the simple point, your Honour.

CALLINAN J:   I think that is too narrow, I really do.

MR ROTHMAN:   That is the point, your Honour, and that is all that can be said in relation to it.  If your Honour pleases.

GAUDRON ACJ:   Yes, thank you, Mr Rothman.  Yes, we need not trouble you, Mr Gleeson.

We are of the view that the proposed appeal does not enjoy a sufficient prospect of success to justify the grant of special leave.  The application is refused.

MR GLEESON:   We make an application for costs.

GAUDRON ACJ:   You cannot resist it?

MR ROTHMAN:   No, your Honour.

GAUDRON ACJ:   It is refused with costs.

AT 2.48 PM THE MATTER WAS CONCLUDED