Craig Roberts v L Quay Futures Brokers

[2004] NSWSC 572

CITATION:	Craig Roberts v L Quay Futures Brokers [2004] NSWSC 572
HEARING DATE(S):	17 June 2004
JUDGMENT DATE:	17 June 2004
JUDGMENT OF:	McDougall J at 1
DECISION:	See para [60] of judgment
CATCHWORDS:	RESTRAINT OF TRADE - contract of employment - where defendant seeks to enforce restraint of trade in contract of employment - restraint in form of non-solicitation clause - where restraint would prevent plaintiff from approaching prospective clients of defendant - where restraint would prevent plaintiff from approaching actual clients of defendant that plaintiff had no contact with in the course of his employment with defendant - whether restraint no wider than reasonably necessary to protect legitimate interests of defendant - Restraints of Trade Act 1976 (NSW) - s 4 - whether restraint should be read down - whether grant of relief under Act would mean redrafting restraint
LEGISLATION CITED:	Restraints of Trade Act 1976 (NSW)
CASES CITED:	Hartleys Ltd v Martin [2002] VSC 301 Lindner v Murdoch's Garage (1950) 83 CLR 628 Twenty-First Australia Inc v Shade (2428 of 1998, 31/7/98, unreported)
PARTIES :	Craig Roberts (applicant/claimant on the notice of motion) L Quay Futures Brokers Pty Limited (respondent)
FILE NUMBER(S):	SC 2809/04
COUNSEL:	F G Lever SC (for Craig Roberts) S C Rothman SC/S J Burchett (for L Quay)
SOLICITORS:	Clayton Utz (for Craig Roberts) Swaab Attorneys (for L Quay)

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

McDOUGALL J

17 June 2004 Ex tempore (revised 28 June 2004)

PTY LIMITED

JUDGMENT

1 HIS HONOUR: On 28 August 1996 the defendant offered employment to the plaintiff and the plaintiff accepted that offer of employment. The terms of employment were set out in a letter dated 28 August 1996 signed by Mr Whitby on behalf of the defendant and by the plaintiff, although the plaintiff’s signature is dated 2 September 1996 (the date of commencement of employment). The plaintiff’s duties were not specified in that letter.

2 The plaintiff’s terms of employment were varied on 24 July 1997 by letter dated that date and again signed by Mr Whitby and by the plaintiff. It will be necessary to look in more detail at that change.

3 On, apparently, 2 September 2002, the plaintiff and the defendant entered into a “workplace employment agreement”. That agreement has an effective date of 31 July 2002 and is said, notwithstanding the date of signature, to be dated 31 July 2002.

4 The terms of employment were varied yet again in about November 2003 when the defendant sent to the plaintiff and other employees a standard form of letter. That letter does not appear to have been accepted expressly by the plaintiff but it is apparent that the terms set out in it operated after the date of the letter.

5 The defendant is a futures broker. It was established by Mr Whitby in 1991. It is and always has been a full floor member of the Sydney Futures Exchange. It is one of about twenty-nine such members of what Mr Whitby describes as a highly competitive market. The competitors include not only other local futures brokers but also international and domestic banks and international brokerage firms. Mr Whitby says that the defendant offers a full range of brokerage services and futures to Australian and international clients from every state and territory in Australia.

6 The plaintiff was employed initially to establish a futures dealing room of the defendant. Once that was fully commissioned (as he says), he was appointed as dealing manager and thereafter as retail manager. He remained in that position until his employment by the defendant ceased upon the expiry of his letter of resignation dated 6 April 2004. (Four weeks’ notice was required of the plaintiff, who ceased employment on 2 May 2004.)

7 By its amended notice of motion filed in Court today, the defendant seeks to enforce a particular provision - clause 45 - of the workplace employment agreement. The workplace employment agreement included two covenants in favour of the employer from the plaintiff that might be described as restraints of trade, namely, clauses 45 and 46. Although the defendant does not seek to enforce clause 46 (and on the evidence before me has always made it clear that it would not seek to do so), it is, I think, relevant to look at clause 45 in the context of clause 46:

“45. Non Solicitation
45.1
The Employee shall not at any time during the period of employment or for a period of six months after termination of employment, for whatever reason, either on the Employee’s own account or for any other person, firm, organisation or company, solicit, endeavour to entice away from or discourage from being employed by the Employer, any other Employee or actual client/customer or prospective client/customer of the Employer.
46. Restraint of Trade
46.1
At the discretion of the Empoyer [sic]
(a) The Employee may not, at any time during the term of this employment agreement and for a period of 6 months after the termination of employment with the Employer,
(b) Establish, purchase, or obtain an interest in, either directly or indirectly; or
(c) Become an Employee of any business, which carries on business similar to that of the Employer, without the express written consent of the Employer (provided that such consent will not be unreasonably withheld).”

8 The defendant says that its business was built up on the basis of the activities of, in particular, Mr Whitby. Mr Whitby’s evidence is that when he commenced the business in 1991 there were no clients. He says that he built it to where it has some 2,000 clients and a turnover from all brokerage of about $7.5m a year. The evidence would suggest that a little under fifty per cent is due to the activities of the retail department for which the plaintiff was responsible.

9 Mr Whitby gives evidence of the nature of the services provided by the defendant to its clients. He also gives evidence of the way in which, over the years, he has built the client base of the defendant. It is apparent that the defendant spent very large sums of money - in excess of $500,000 in the past five years - on advertising and promotion. The advertising and promotion included not merely promoting the services of the defendant to actual or potential clients, but also promoting the role of the plaintiff in the defendant’s business. That was done specifically by sending the plaintiff to what are called trade shows where the defendant promoted its services. Mr Whitby says that the plaintiff has benefited from attending those trade shows by making personal contact with new clients.

10 It is apparent that the business that the plaintiff carried on for the defendant involved direct daily contact with particular clients of the defendant. That is said to have been by telephone, email or fax. The plaintiff’s duties included not only executing trading transactions on the instructions of clients, but also providing other services, including research on markets in which the clients traded.

11 It is apparent that particular dealers employed by the defendant would service a particular client or group of clients. The plaintiff says that, of the defendant’s total client base, he was responsible for serving the needs of approximately 200 clients - some ten per cent of the total. The plaintiff also says that, although he was mostly engaged in dealing with his own clients (or clients of the division for which he had responsibility), other brokers might service those clients whilst he was on leave; and in similar circumstances he might from time to time service the clients of other brokers.

12 The plaintiff was employed initially upon the basis that he would be paid a salary. That was varied by the letter of 24 July 1997 which provided, among other things, that the plaintiff would be remunerated by commission (presumably on transactions effected by him) at the rate of thirty per cent. The letter also specified that the plaintiff would be responsible “for all errors in respect of your clients” and “any costs will be deducted from commission due to you”.

13 The workplace employment agreement on any view effected a substantial change in the documentation of the contract of employment. It came into force, as I have noted, on 31 July 2002. It was expressed to remain in force “until replaced or the employment is terminated”. The agreement provided specifically that (except in the case of summary dismissal for serious misconduct) it might be terminated by either party giving four weeks’ notice to the other. It provided further that if the employee terminated the contract, then the defendant, as employer, might put the employee on what was called “resignation - garden leave”. That entitled the defendant to direct the plaintiff not to attend work at all. I would infer that one of the purposes of clause 40.1 was to enable the defendant, without being in breach of the agreement, to cause the plaintiff to cease all contact with clients. I would infer that another purpose was to enable the defendant to put another person into the position of the plaintiff, so that that other person could obtain familiarity with the business and clients for whom the plaintiff had been responsible.

14 It was put by Mr Lever SC, who appeared for the defendant, that the workplace employment agreement provided substantial additional benefits to the plaintiff. I am not sure that that is so. For example, although the document refers to commission being paid at the rate of forty per cent (rather than at the rate of thirty per cent as applied under the letter of 24 July 1997), it is common ground that the forty per cent commission rate had been introduced prior to 31 July 2002; the defendant says, and the plaintiff does not dispute, in or about May 2002. Mr Lever pointed to other alleged benefits, including carer’s leave (clause 11), parental leave (clause 13), bereavement leave (clause 15) and study leave (clause 16). The beneficence said to be apparent in those provisions does not appear to me. Carer’s leave involved taking up sick leave. Parental leave was provided in accordance with the relevant provisions of the Industrial Relations Act: it would not appear, as a matter of choice. Bereavement leave was limited to two days. Study leave was for a course of study approved by the employer and allowed up to four hours a week for the purpose of lectures, tutorials and examinations.

15 In other respects, the workplace employment agreement could be seen to be disadvantageous. Although it confirmed the forty per cent commission rate, it continued the policy that deductions could be set off against other commission. In schedule 1 it was provided that:

“All errors made by you and any defaults made by your clients will be your responsibility to recover. Monies held in arrears by the company may be used to offset any outstanding amounts. Your responsibility to these errors or defaults will be 40% of the error or default”.

16 The reference to “any defaults made by your clients” and the assertion of an entitlement to offset forty per cent of the error or default was an unfavourable change from the position set out in the letter of 24 July 1997.

17 There was some dispute between the parties as to the precise circumstances in which the plaintiff came to sign the workplace employment agreement. The plaintiff sought to give the impression that he was placed under pressure to sign it. The defendant suggested that he was not. I do not find it necessary to resolve that dispute, particularly since this is an interlocutory application. It is sufficient to say that if the plaintiff did object to the terms of the contract, he took some time to display his state of mind.

18 The change that occurred in November 2003 was a change whereby the ability of the defendant to offset against commissions otherwise payable to the plaintiff was applied not to forty per cent but to 100 per cent of amounts relating to errors or client defaults. In truth I think it was the imposition of that policy, together with a change flagged by the same letter to the basis upon which commission would be calculated, that caused the plaintiff to become dissatisfied and that ultimately led to his resignation.

19 The change in the manner of calculating commission was that the defendant decided to deduct an amount of fifty cents per trade on all trades undertaken. This, it was said, was to recover the cost of effecting the trade (although the evidence is that the cost of effecting the trade was about thirty cents). Of course, where the trade was large and the commission was substantial, the deduction would have little impact. However, the plaintiff says a large number of trades effected by him were in fact small, and the effect of the deduction for those trades affected the commission otherwise payable in a substantial way.

20 The evidence shows that another employee of the defendant, a Mr Benjamin Gregory, gave a letter of resignation of 5 March 2004. As I have said, it was a month later, on 6 April 2004, that the plaintiff gave his letter of resignation. Mr Gregory now works for a competitor of the defendant, a brokerage house known as BrokerOne Pty Limited. The plaintiff, since his resignation became effective, has joined the same company. However, it is apparent that negotiations between the plaintiff and BrokerOne preceded his resignation by a substantial margin.

21 On 14 January 2004, the plaintiff and BrokerOne signed a “confidentiality agreement”, the express purpose of which was said to be to enable Mr Roberts to “evaluate the benefits of working at BrokerOne.” For that purpose, apparently, confidential information was to be disclosed to the plaintiff and it was that confidential information that was to be kept confidential.

22 There was also tendered a number of draft letters from BrokerOne to the plaintiff. One of those, if executed, would have confirmed the terms of his employment. The draft included as clause 9 a non-competition agreement. I set it out:

“Non-Competition after your employment
For a period of 3 months after your employment with the Company ceases (however that cessation occurs), you agree that you will not within New South Wales:
(a) carry on, advise, provide services to or be engaged, concerned or interested in or associated with or be otherwise involved in, directly or indirectly, in any capacity whatsoever, any business activity that is competitive with any business carried on by the Company;
(b) canvass, solicit or endeavour to entice from the Company any employee or independent contractor of the Company;
(c) canvass, solicit or endeavour to entice from the Company any person who was a client of the company during the term of your employment; or
(d) Otherwise counsel any other person to perform any of the above acts.”

23 Other draft documents, if executed, would have defined the rights of the plaintiff to receive remuneration from BrokerOne. It may be noted that if those agreements were implemented, the plaintiff would not receive income on the whole of the trades and would have been liable to have amounts for errors (and other things) offset against commission otherwise payable to him.

24 The case for the defendant is that it has a substantial interest in preserving the client base that it has built up through the activities of Mr Whitby. It says that that interest would be infringed if the plaintiff were allowed to solicit its customers. Accordingly, it says, it is entitled in substance to the relief that it seeks.

25 The primary position is that a restraint of trade is void. That applies not just to the classical restraint of trade purporting to prevent a person from working for a particular employer, but also to a restraint of the kind presently sought to be enforced. That is because of the public interest in competition. It follows that a person seeking to enforce a restraint of trade must show that the restraint is no wider than is reasonably necessary to protect its legitimate interests. The test immediately directs attention to the nature of the interest that is sought to be protected. This issue was considered by Gillard J in Hartleys Ltd v Martin [2002] VSC 301. At para [91], his Honour stated (in my respectful opinion correctly) that “[i]t is well-recognised that an employer is entitled to impose a restrictive covenant to reasonably protect his business against ex-employees taking customers with them to a business in competition with their former employer.”

26 At para [92] and following, his Honour discussed the decision of the High Court in Lindner v Murdoch’s Garage (1950) 83 CLR 628. In that case Latham CJ who dissented, but whose statement of the principles was endorsed by Webb J (at 647), said at 634:

“ … the covenant in restraint of trade is not a covenant against mere competition but is a covenant directed to securing a reasonable protection of the business interest of the employer, and in the circumstances is not unjust to the employee. The interest which can validly be protected is the trade connection, the goodwill of the business of the employer.”

27 In the same case, Fullagar J at 649 focused on the need to characterise the interest that the employer claimed to have and claimed legitimately to protect. Kitto J at 654 characterised the interest as being:

“… protection for their business connection against the possibility of its being affected by the personal knowledge of and influence over the customers which the appellant might acquire in their employment.”

28 His Honour continued by saying that:

“The knowledge which, because its use may deprive the employer of the business connection which he is entitled to preserve as his own, he may require his employee to abstain from using, is objective knowledge of customers, their peculiarities, their credit and so forth … .”

29 In the present case, it is clear that a restraint that was framed expressly in terms of clause 45 would be too wide. That is because clause 45 seeks to protect not only what might arguably be characterised as legitimate - namely, the connection between the defendant and existing customers - but also that which cannot be characterised as legitimate - namely, a non-existent connection between the defendant and any “prospective client/customer”.

30 It must follow that if the defendant is to succeed on this application, it must rely on the Court exercising its power under s 4 of the Restraints of Trade Act 1976 (NSW).

31 In the present case, if the defendant has a legitimate interest, it is to protect its client base that has been built up over the years through the efforts (on the defendant’s evidence) of Mr Whitby. This is not a case, on the defendant’s evidence, where it is said that the business or client base of the defendant was built up by the activities of the plaintiff, being activities being carried on by him in the course of and for the purposes of his employment. It is not a case where it is said that, as a result of this employment, the plaintiff has some special or peculiar knowledge.

32 Since what is sought to be protected is the business connection between the defendant and its customers (to adopt the language of Kitto J in Lindner), it follows that the protection must be directed against the possibility of that connection being affected by the plaintiff’s personal knowledge of the defendant’s clients or the plaintiff’s influence over those clients. That must be knowledge or influence that, if exercised outside the relationship of employment, would or might deprive the employer of the benefit of the connection.

33 The evidence of the nature of the connection between the plaintiff and clients is somewhat exiguous. On the one hand the defendant points to the fact that it has promoted its services to customers, including by pointing to the role of the plaintiff in providing those services (although not, it must be said, pointing to the plaintiff by name). It is, I think, clear that in the course of his employment the plaintiff must have built up some sort of business relationship with the defendant’s clients with whom the plaintiff dealt. Whether or not that relationship of itself is sufficient to cause those clients to leave the defendant is something that the evidence does not enable me to assess. On the other hand, it is, I think, clear enough that if the plaintiff sought to entice those clients of the defendant away from the defendant, the plaintiff would be facilitated in doing so because of his prior contact with those clients. In other words, I think if there were to be what might be called a free for all, the plaintiff, through BrokerOne, would be in a stronger position than other competitors who had no previous contact with those clients.

34 Another issue of difficulty with the terms of clause 45 is that it seeks to restrain the plaintiff from approaching not only (as I have said) prospective clients of the defendant, but also actual clients of the defendant with whom the plaintiff might have had no contact. On the evidence, that could extend to some ninety per cent of the client base.

35 There are at least two consequences of this. The first is that, looking at the primary issue, it is hard to see how the legitimate interests that I have identified could be affected in respect of clients with whom the plaintiff had no prior contact - that is to say, again adopting the language of Fullagar J in Lindner - clients with whom the plaintiff had no personal knowledge and over whom he had no influence. (It was not submitted and, in any event the evidence does not show, that the plaintiff, in the course of his employment by the defendant, had gained access to some special information or process that would give him “the inside running” in soliciting clients of the defendant with whom he had had no prior contact.) Second, and practically, the difficulty is that if an injunction were granted as sought, the plaintiff could well breach it by soliciting, entirely innocently, people or institutions who were in fact clients of the defendant at the relevant time but whom the plaintiff did not know to be such clients.

36 In this context, I note that the restraint of trade that was in force in Hartleys was somewhat different in character. The terms of the relevant clause are set out by Gillard J in para [71] of his reasons for judgment and the explanation of the word “client” is set out in para [73]. I shall set out both those paragraphs:

“71. Each contract contained the following restrictive covenants.
“HPL has invested a substantial amount of time and effort to develop business relationships with its Clients. To protect HPL’s goodwill, you agree that you will not (directly or indirectly) for a period of three months after termination (including resignation) of your employment, on your own account or for any other person, firm, company or business:
(1) perform the services of a broking or investment advisory nature for any Client without the prior written consent of HPL; or
(2) solicit, entice away, interfere with or endeavour to solicit, entice away or interfere with any Client; or
(3) employ, engage, solicit or entice away or endeavour to employ, engage, solicit or entice away from HPL any Key Employee of HPL.”
…
73. “”Client” for the purpose of this clause means any person, firm, corporation or entity which was or is a client or customer of HPL (or any associated company of HPL) and with whom you have had direct dealings in the period of 12 months prior to the termination of your employment with HPL.””

37 Although the restraint looked at by itself did not appear to be limited, it is clear that it was limited in terms to soliciting of clients with whom the defendants (in that case) had had direct dealings in a period of twelve months prior to the termination of their employment. That, to my mind, is an extremely significant distinction from the wording of clause 45.

38 Another significant distinction is that the clause in Hartleys prevented solicitation for a period of three months, whereas the clause in the present case would prevent it for a period of six months.

39 There is not a great deal of evidence as to what might be regarded as “industry practice” as far as restraints of trade are concerned. Mr Lever proposed Hartleys as being in substance a comparable case. If I were to take that view then I would conclude, first, that it indicated that a period of three rather than six months might be reasonable and, second, that a severe restriction on the ambit of the non-solicitation clause (limiting it in effect to clients with whom the employee had had actual dealings) would be appropriate.

40 Equally, if the draft agreement propounded by BrokerOne to the plaintiff were to be taken as evidencing some form of industry standard, then it would support a reasonable period as being three months (noting, however, that it was not limited to clients with whom an employee had had actual dealings).

41 For all these reasons, I conclude that the relief sought in the terms of the amended notice of motion is too wide. In substance, I do so because the relief sought is not restricted to those clients of the defendant with whom the plaintiff had had any dealings in the course of his employment. As I have said, this seems to me to be inconsistent with the purpose for which the restraint is enforced.

42 Further, I think that the period of six months cannot be sustained. There are two reasons for this. The first I have already referred to. The second is that at least one purpose of the restraint is to enable the employer (in this case the defendant) to put someone else in the shoes and position of the employee (in this case the plaintiff) and to put that person in a position to ingratiate himself or herself with the client formerly serviced by the employee. There is no basis for concluding that a period of six months is necessary for that purpose. Indeed, given that the defendant covenanted for one month’s notice, it might be thought that this represents its judgment of how long it would need to replace the plaintiff in the event that he gave notice of resignation.

43 There are a number of other difficulties with the relief sought. The principal one is, as I have said, that because of the relatively limited contact (in percentage terms) between the plaintiff and the defendant’s client base, the defendant would be at real risk of breaching the injunction without knowing that he might be doing so. That is not a result that I would willingly contemplate.

44 Further, if it were necessary for me to do so, I would decline injunctive relief on discretionary grounds. The evidence shows that the plaintiff earned very substantial sums of money and undertook very substantial commitments during the course of his employment with the defendant. It is clear that the plaintiff expected to earn at least that large an amount of money and it may well be substantially more through his employment with BrokerOne. Despite the submissions of Mr Lever based on some accounting records produced by BrokerOne, it does not appear that the plaintiff has earned any substantial sums of money since he started work for that company. Indeed, the plaintiff says that his ability to earn such substantial sums appears to be sterilised because up until now he has been observing the terms of clause 45.

45 Mr Lever argued that the plaintiff should not be in effect rewarded by the exercise of discretion in his favour because it was his own contemplated breach of contract that put him into the position that he now complains of. However, I think in the circumstances where, on any view, clause 45 is too wide, the plaintiff cannot be blamed for seeking not to obey it. Not all solicitation would be prohibited by a properly drafted clause; and, at common law, there can be no question of breach of contract where the obligation that is breached is void. In this context, it is worth noting that up until its oral submissions in this case the defendant has steadfastly maintained the enforcability of clause 45 in full.

46 In short, the plaintiff’s evidence on this point is that he cannot make the amounts of money that he needs to support his lifestyle and commitments unless he is able to do what he seeks to do, namely, to solicit the clients of the defendant.

47 On the other hand, there is no evidence from the defendant that if the injunction were refused it would suffer irreparable monetary losses. Indeed, it may well be that, according to Mr Whitby’s evidence as to the highly competitive nature of the futures market, a substantial degree of loss or turnover is likely to happen in any event. It may well be that this will happen simply because of the departure of the plaintiff - something for which the defendant has no remedy.

48 If it were necessary for me to decide on the basis of discretionary considerations, I would conclude that the balance of convenience does not favour the grant of injunctive relief. But I do not refuse relief on that basis. As I have said, I reach my conclusion because of my analysis of the clause and its application in the circumstances to which I have referred. I have dealt briefly with the discretionary considerations only in case this matter goes to another court.

49 Mr Lever asks that I exercise the Court’s power pursuant to s 4 of the Restraints of Trade Act to order a more limited restraint. The approach that the Court should take to s 4 is, I think, clear. A covenant in restraint of trade may be read down or particular passages, in some circumstances, may be as it were pencilled out. However, the Court cannot, in exercising the power given by s 4, remake the contract or a particular covenant.

50 If it were to be suggested that I should order a restraint that (for example) prohibited the plaintiff from soliciting clients of the defendant with whom the plaintiff had had contact in the course of his duties, then it would again focus attention on the nature of the rights sought to be protected and the extent to which any future contact between the plaintiff and those particular clients might infringe the interest of the defendant in securing its connection with those clients.

51 I do not think that it is possible in some a priori way to say that connection between the plaintiff and client of a certain duration or a certain intensity will lead to the conclusion that the relevant interest of the defendant is likely to be threatened. Nor do I think it is possible to say in some a priori way what the point of discrimination should be.

52 For example, as I have pointed out, the Court in Hartleys upheld a covenant that in substance restricted the relevant range of clients to those with whom the defendants had had direct dealings in a period of twelve months prior to the termination of their employment. In the present case there may be - I do not know - a number of clients with whom the plaintiff had incidental or tangential dealings in the relevant period (assuming, although there is no evidence on this point, that twelve months is a relevant period). But it is difficult to see how incidental or tangential dealings occurring over a period of twelve months could give rise to a sufficient threat to the legitimate interests of the defendant so as to warrant protection. Any analysis of this issue would, in my view, require detailed evidence as to the nature of the connection and the way in which that connection put the plaintiff in a position to infringe on what, on analysis, may be said to be the legitimate interests of the defendant.

53 I am comforted in this approach by what Young J said in Twenty-First Australia Inc v Shade (2428 of 1998, 31 July 1998, unreported). His Honour said that the modern approach to the operation of the Restraints of Trade Act is to look at the particular breach of covenant sought to be restrained and to grant an injunction when, in substance, the particular breach threatened a legitimate interest of the employer, even though (as of course the Act makes clear) the covenant was expressed in terms so wide as to be void against public policy by reason of the common law.

54 As I read what his Honour said, he was sanctioning the approach to the application of the Act that required specific evidence in relation to specific breaches - not only evidence as to the breaches threatened (of which there is some in this case), but evidence as to the impact of those breaches of the relevant interest. Where such a breach falls within the scope of a reasonable protection (which itself is within the scope of the excessive protection) it may be restrained. That is quite different to rewriting the covenant and granting an injunction in terms of the covenant so rewritten.

55 For these reasons, I decline to exercise the Court’s power under s 4. (That is not to say that another judge might not have a different view on appropriate evidence.) In consequence, therefore, the amended notice of motion should be dismissed.

56 Mr Lever refers to an undertaking given by the defendant inter partes to keep “all proper accounts to enable the determination of the profits earned should that become necessary”; letter of 11 June 2004 from the plaintiff to the defendant’s solicitors. I should have said that that was one of the matters that I regarded as relevant in the balancing exercise required in relation to discretionary considerations.

57 Mr Lever says that I should impose upon the plaintiff a requirement that he give or maintain his undertaking. I do not know on what basis I can do that. The plaintiff’s solicitors have set out what their client intends to do. I would assume that, if that situation changed, the plaintiff’s solicitors would be instructed to notify the defendant’s solicitors accordingly. However, I am not exercising any discretion in favour of an application for relief by the plaintiff. There is, therefore, no basis for me to impose any condition (whether as sought by Mr Lever or otherwise) upon the plaintiff. As I have said, all I can do is act upon the basis that the plaintiff, through his solicitors, has undertaken to the defendant to keep appropriate accounts and to express the view that if that situation changes the defendant is entitled to know.

58 The plaintiff seeks costs of the hearing of the notice of motion. Mr Lever submits that those costs should be costs in the proceedings, in particular because this matter is not yet complete and because the application was made as a matter of considerable urgency by reason of the plaintiff’s intimation to commence solicitation after tomorrow.

59 In my judgment, the issues raised by the amended notice of motion are discrete issues. The defendant has been wholly unsuccessful and the plaintiff has been wholly successful. It follows, I think, that the ordinary rule as to costs should apply.

60 I therefore make the following orders:

(1) I order that the amended notice of motion filed in court on 17 June 2004 be dismissed.

(2) I order the defendant (applicant) to pay the plaintiff’s (respondent’s) costs of that notice of motion.

(3) The exhibits may be handed out.
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Last Modified: 07/08/2004