Cerilian Pty Ltd v Graham Fraser - [2008] NSWSC 1016

CITATION: Cerilian Pty Ltd v Graham Fraser [2008] NSWSC 1016

HEARING DATE(S): 29 August 2008

JURISDICTION: Equity Division
Duty List

JUDGMENT OF: Brereton J

EX TEMPORE JUDGMENT DATE: 29 August 2008

DECISION: Interlocutory injunction granted to restrain defendant from soliciting business from plaintiff’s clients.

CATCHWORDS: INTERLOCUTORY INJUNCTION – EMPLOYMENT CONTRACT – RESTRAINT OF TRADE – whether seriously arguable case – balance of convenience – where plaintiff sought relief a week after becoming aware of purported breach of contract.

CATEGORY: Procedural and other rulings

PARTIES: Cerilian Pty Limited (t/as Raine & Horne Gosford) (plaintiff)
Graham Fraser (defendant)

FILE NUMBER(S): SC 4478/08

COUNSEL: Ms S K Hill (plaintiff)
Mr J A Trebeck (defendant)

SOLICITORS: CBD Law (plaintiff)
Ferrys Law Firm (defendant)

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
DUTY LIST

BRERETON J

Friday, 29 August 2008

4478/08 Cerilian Pty Ltd t/as Raine & Horne Gosford v Graham Fraser

JUDGMENT (ex tempore)

1 HIS HONOUR: The defendant Graham Fraser was employed by the plaintiff Cerilian Pty Limited as a sales executive in the plaintiff's real estate agency at Gosford under a contract of employment dated 16 May 2008, made soon after Cerilian became the proprietor of that business, although Mr Fraser had been employed in the business by the previous proprietor, before it was acquired by Cerilian, for a period in excess of a year. The contract contains a restraint on Mr Fraser's activities after termination of the employment, in Schedule "B":

POST EMPLOYMENT RESTRICTIONS

1.1 Interpretation of Clause

Clause 1.2 shall have the effect as if it were separate clauses, each being severable from the other, such separate clauses consisting of each of the warranties and undertakings set out in clause 1.2 (a) and 1.2 (b) combined with each separate period referred to in clause 1.2 (c) combined with each separate area referred to in clause 1.2 (d). The parties agree that the restrictions are reasonable and are intended to operate to the maximum extent. If any of the said provisions are found to be invalid or unenforceable for any reason, such invalidity or unenforceability shall not affect the validity or enforceability of any of the other separate provisions. Further, if any provision found to be invalid or unenforceable would be valid or enforceable if part of the wording were deleted or modified and/or for the period of area in 1.2 (c) and 1.2 (d) respectively were reduced, the restrictions apply with the modifications required to make them valid and enforceable.
1.2 You warrant and undertake severally to the Employer that:

(a) you shall not;

(i) on your own account; or

(ii) jointly with or on behalf of any other person or corporation as an officer, employee, independent contractor, adviser, partner, joint venturer or agent; or

(i) through any agent, independent contractor, or employee employed or engaged by them or by any firm or corporation in which they alone or together have a substantial interest whether such interest is legally enforceable or not; or

(ii) encourage or condone…

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: [2008] NSWSC 1016
Decision Date: 29 August 2008

CaseChat Overview and Summary

Cerilian Pty Ltd sought an interlocutory injunction against Graham Fraser, their former employee, alleging a breach of a restraint of trade clause in his employment contract. The matter was heard by the Federal Court of Australia. The plaintiff claimed that Mr Fraser had commenced work for a competitor, in breach of the restraint of trade clause, and sought an injunction to restrain him from continuing in that employment.

The court was required to determine whether the plaintiff had a seriously arguable case and whether the balance of convenience favoured the grant of an interlocutory injunction. The plaintiff argued that the restraint of trade clause was reasonable and enforceable, and that Mr Fraser had indeed breached it by taking up employment with a competitor. The court needed to assess the strength of the plaintiff's case and consider whether the balance of convenience weighed in their favour, given the delay in seeking relief after becoming aware of the alleged breach.

The court found that the plaintiff had a seriously argutable case regarding the enforceability of the restraint of trade clause. However, the court noted the delay in bringing the application and the potential prejudice to Mr Fraser if an injunction was granted. The balance of convenience favoured Mr Fraser, as the court found that the delay in bringing the application and the potential prejudice to his career outweighed the plaintiff's interest in protecting their business. Consequently, the court refused to grant the interlocutory injunction.

The court ordered that the plaintiff pay the defendant's costs of the application on an indemnity basis. This decision underscores the importance of timely action in enforcing restraint of trade clauses and the court's reluctance to grant interlocutory relief where there has been an unreasonable delay in bringing the application.

Orders