Cushman & Wakefield Agency (NSW) Pty Ltd v Hudson

[2023] NSWSC 218

Supreme Court

New South Wales

Medium Neutral Citation:

Cushman & Wakefield Agency (NSW) Pty Ltd v Hudson [2023] NSWSC 218

Hearing dates:

10 March 2023

Date of orders:

13 March 2023

Decision date:

14 March 2023

Jurisdiction:

Equity - Duty List

Before:

Richmond J

Decision:

Application of the Defendant for the discharge of the interlocutory injunction in Order 5 made on 7 March 2023 is dismissed.

Catchwords:

COMMERCE — restraint of trade — interlocutory relief — whether interlocutory injunction should be discharged — whether there is a serious question to be tried — whether the balance of convenience favours the granting of interlocutory relief

Legislation Cited:

Restraints of Trade Act 1976 (NSW)

Cases Cited:

Cactus Imaging Pty Ltd v Peters (2006) 71 NSWLR 9; [2006] NSWSC 717

HiTech Group Australia Ltd v Riachi [2021] NSWSC 1212

Isaac v Dargan Financial Pty Ltd (2018) 98 NSWLR 343; [2018] NSWCA 163

John Fairfax Publications Pty Ltd v Birt [2006] NSWSC 995; 58 AILR 200-270

Kolback Securities Ltd v Epoch Mining NL (1987) 8 NSWLR 533

Label Manufacturers Australia Pty Ltd v Chatzopoulos [2022] NSWSC 1059

Metcash Ltd v Jardim (No 3) [2010] NSWSC 1096; 273 ALR 407

Toll (FGGT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165; [2004] HCA 52

TullettPrebon(Australia) Pty Ltd v Purcell [2008] NSWSC 852; 175 IR 414

Woolworths Ltd v Olson [2004] NSWCA 372; 55 AILR 200-133

Category:

Principal judgment

Parties:

Cushman & Wakefield Agency (NSW) Pty Ltd (Plaintiff)
Rosa-lyn Hudson (Defendant)

Representation:

Counsel:
Mr D Mahendra, Mr J Smith (Plaintiff)
Ms B Nolan (Defendant)

Solicitors:
King & Wood Mallesons (Plaintiff)
Green & Associates Solicitors (Defendant)

File Number(s):

2023/76041

JUDGMENT

1. On 7 March 2023, the Court granted an ex parte interlocutory injunction against the defendant, restraining her from competing with the plaintiff, attending its premises or contacting its customers or clients until 3 May 2023, which is the date her employment with the plaintiff ends following the expiry of the 3-month notice period under her contract of employment.

2. On 10 March 2023, the defendant made an oral application to have the interlocutory injunction discharged. On 13 March 2023, I dismissed the application and indicated that I would publish my reasons separately. These are my reasons.

Background

3. The plaintiff, which is a member of a multinational group of companies known as the Cushman & Wakefield Group (the Group) conducts an office leasing business in New South Wales.

4. The defendant commenced employment with the Group in early 2016, in the position of Manager – NSW Leasing. Following a series of changes in her role, salary, working hours and other conditions, the defendant entered into a new contract of employment with the plaintiff on around 12 August 2022, with the title Director Office Leasing, New South Wales. Before referring to relevant terms of that contract, it is necessary to set out some of the history of the defendant’s employment arrangements with the Group:

1. The defendant was originally employed by Cushman & Wakefield Pty Ltd (then known as DTZ Pty Ltd) in the position of Manager – NSW Leasing under the terms of an employment contract dated 14 January 2016.

2. By letter dated 2 May 2018, the terms of that original employment contract were amended to confirm her new title of Associate Director, Office Leasing with effect from 1 July 2018 with an increase in total remuneration and a change to her entitlement to commission. The letter stated that all other terms and conditions of her employment would remain unchanged as per the original contract.

3. By letter dated 7 August 2018, the defendant was informed that her employment entity would be changed to the plaintiff with effect from 1 July 2018. The letter stated that all other terms and conditions of her employment would remain unchanged as per the original contract.

4. By letter dated 9 December 2020, the defendant was informed that her job title would be changed to “Director” with effect from 1 January 2021, with all other terms and conditions of her employment remaining unchanged as per the original contract.

5. By letter dated 17 December 2020, the defendant was offered by the plaintiff, and accepted, a retention payment of $350,000 with effect from 1 January 2021, which was subject to her continuing employment with the plaintiff, and on terms that a portion would be repayable if she resigned her employment with the plaintiff prior to 31 December 2024.

6. By letter dated 3 February 2021, the defendant was informed that her application for a flexible work arrangement had been approved by the plaintiff with effect from 1 March 2021, under which she would work part-time (30.4 hours per week over 4 days), which a proportional reduction in her remuneration. Shortly afterwards, the plaintiff sent the defendant a letter attaching a new contract of employment to apply to her part-time employment which she signed on 7 April 2021, which replaced the previous contract. When she signed it, she made two handwritten changes to the terms: first, she changed the notice period for termination of the contract from 12 weeks to 4 weeks; and second, she changed the restraint period in the post-contract restraint from 3 months to 1 month.

7. In July 2022, the defendant informed the plaintiff that she wished to return to work on a full-time basis and requested an increase in her base salary to $180,000. During the course of the discussions leading to her return, Ms Hudson sent an email to the plaintiff which stated:

I have been working at Cushman & Wakefield for over six years and have consistently been one of the top fee earners within the leasing team and the overall business. Other than 2020, I have written over $800,000 per annum in fees for Cushman & Wakefield, writing $2,400,000 last year. Taking into consideration my current appointments and upcoming targets I anticipate that I will remain one of the top fee earners for Cushman & Wakefield.

I have calculated that childcare will cost me in excess of $96,200 per annum, therefore my current structure of $100,000 base salary is unfeasible. I need a secure monthly income to justify my return to full-time work.

8. On 10 August 2022, the plaintiff sent by email to the defendant a new contract of employment for her signature under cover of a letter which stated:

Cushman & Wakefield (Agency) NSW Pty Ltd (“Company”) wish to confirm your transition to full time work arrangements effective 16 August 2022 (“Effective Date”) with continuity of service from 29^th February 2016.

The terms and conditions set out in this letter and the enclosed Employment Agreement including its attachments (“Agreement”) will replace your existing employment arrangements from the 1 March 2021. You will remain in the position of Director Office Leasing, New South Wales (“Position”), based at 1 O’Connell Street, Sydney NSW 2000 and report National Director & NSW Head of Office Leasing.

Your annual remuneration will be as follows: …

Your Base Salary will be paid into your nominated bank account monthly. Particulars relevant to superannuation are set out below.

Please read the contents of the Agreement carefully as it sets out the terms and conditions of your employment with the Company. You can confirm your acceptance of the Agreement by initialling each page and signing in the spaces provided in the duplicate Employment Agreement and attachment and returning it to the HR Operations Tea at [email protected] on or prior to the Effective Date.

9. The attachment to the letter comprised an agreement expressed to be between the plaintiff and the defendant dated 9 August 2022, comprising 11 pages, of which the last 2 were headed “Schedule A The Commission Formula” setting out her entitlement to commission which was referred to in the body of the contract (cl 5.6). The last page of Schedule A provided for the insertion of the signature of the plaintiff and the defendant. An electronic signature on behalf of the plaintiff appeared on that page at the time the defendant received the letter. The defendant signed electronically in the space for her signature on that page on 12 August 2022 and she then returned to the plaintiff the 2‑page Schedule A which included both signatures, but not the remainder of the contract.

5. The new contract of employment which the defendant entered into with the plaintiff on 12 August 2022 (the Contract) included the following:

4.1   During the Employment, the Executive must:

a.   perform to the best of their ability and knowledge the duties required of the Position which may include duties for the benefit of any member of the Group (“Employment Duties”);

b.   serve the Company faithfully and diligently to the best of their ability;

c.   use all reasonable efforts to promote the interests of the Company and the Group and enhance the reputation of the Company and the Group;

d.   act in the Company’s best interests;

…

4.2   During the Employment, the Executive must not without the express prior approval of the Company undertake any appointment, position or work that:

a.   results in the Executive acting in any capacity in competition with the Company;

b.   otherwise adversely affects the Company;

c.   may create a potential or real conflict of interest with the employment with the Company; or

d.   hinders the performance of the Employment Duties.

…

5.1   The Executive’s total remuneration will be [a specified amount] per annum, unless and until the Executive’s remuneration is varied in accordance with the terms of this Agreement (“Total Remuneration”).

,,,

5.6   Commission

The Executive will be eligible to receive Annual Personal Commission for fees generated solely by the Executive. Details of the Annual Personal Commission are at Schedule A.

8.1   Either party may terminate the Employment at any time and for any reason by giving to the other party 3 months notice.

8.2   After either party has given notice pursuant to cl 12.1, the Company in its absolute discretion may:

a.   terminate the Employment immediately and make a payment to the Executive equal to the Executive’s current total remuneration for the balance of the Notice period;

b.   direct the Executive for all or part of the Notice period not to perform any work, to remain away from its premises and/or not to contact any customer or clients of the Group.

6. The term “Employment” is defined in cl 2.1 to mean “the employment of the Executive by the Company according to the terms of this Agreement.”

7. There were a number of differences between the terms of the Contract and her prior contract. First, under cl 8.1 the period of notice of termination was extended from 1 month to 3 months. Second, cl 12.1 extended the period of the post-contract restraint from 1 month to periods from 3 to 12 months. Third, the term of her remuneration, both as to base salary and commission, were improved.

8. The defendant gave evidence, which was not contested on this interlocutory application, that the first two changes were not made known to her by the plaintiff before she signed the document (beyond the fact that she received by email the letter attaching the Contract for signature referred to at [4(h)]), and that she did not read any part of the Contract apart from the 2 page Schedule A appearing at the end of the document, on which her signature appeared. She thought from all of her discussions and email correspondence that it was not necessary for her to read the document because no other terms were changing. However, the plaintiff does not give evidence that any representatives of the plaintiff said to her that none of the terms of her employment contract were changing apart from her salary and commission in Schedule A and there is no email correspondence in evidence which could be relied on for that purpose.

The defendant’s resignation

9. On 2 February 2023, the defendant gave written notice to the plaintiff of her resignation by an email to Mr Molchanoff attaching a letter of resignation dated 31 January 2023. In that letter the defendant said that she was providing the plaintiff with her “4 week notice period effective from today”, and that her last day with the plaintiff would be 1 March 2023.

10. On 6 February 2023, the plaintiff sent an email to defendant attaching a letter from the plaintiff responding to the defendant’s resignation which stated:

We acknowledge your resignation received 1 February 2023, and want to confirm the arrangements for your 3 months notice period effective 1 February 2023 to 1 May 2023 inclusive. In accordance with the terms of your Employment Agreement dated 9 August 2022, you will remain on garden leave for the remainder of your notice period. Please do not perform any work at this time and/or attend any sites or make contact with any other staff, customers or clients of the Group for the remainder of your notice period. The Company may still contact you if necessary, during your Leave to request information related to your employment and you are required to make yourself available to attend to any such matters at our request, should they arise.

11. The letter also drew the defendant’s attention to the fact that due to her resignation, 50% of her retention payment was now due to be repaid to the plaintiff, and stated that “the Company reserves the right, to the extent permitted at law, to withhold any moneys owed by you to the Company from any moneys due from the Company to you.” (The existence of this letter is the reason for the amendment to Order 8 referred to at [45] below.)

12. Subsequently, the defendant entered into an employment agreement with Jones Lang LaSalle (NSW) Pty Limited (JLL) which provides that her employment with that company will start on 2 March 2023.

13. The defendant’s resignation letter of 2 February 2023 was a repudiation of the Contract because it purported to give only 4 weeks notice. The plaintiff was entitled to accept the defendant’s repudiation and terminate the Contract but was not bound to do so, and was entitled to instead keep it on foot: Tullett Prebon (Australia) Pty Ltd v Purcell [2008] NSWSC 852; 175 IR 414 at [25]; Metcash Ltd v Jardim (No 3) [2010] NSWSC 1096; 273 ALR 407 at [43]. The plaintiff, by its letter of 3 February 2023 took the latter course. Accordingly, under the Contract the defendant was bound to observe the requirements of the gardening leave provision in cl 8.2(b) of the Contract. There is no evidence to suggest that the Contract was terminated by mutual agreement. Nevertheless, it is clear that while the Contract remained on foot, the employer/employee relationship came to an end by reason for the defendant’s resignation: Tullett at [30]; Metcash at [43]. Contractual provisions that require the employee to engage in “garden leave” such as cl 8.2(b) of the Contract are considered to be restraints of trade despite the contract of employment remaining on foot: Tullett at [65]; Metcash at [43].

14. There is no dispute that the defendant continues to be entitled to her salary and commission during this period of gardening leave.

Ex parte injunctive relief

15. On 7 March 2023, the plaintiff commenced proceedings in this Court seeking urgent interlocutory relief because the plaintiff became aware on 6 March 2023 that the defendant had joined JLL. The Court granted an ex parte interlocutory injunction in the following terms:

5.   Upon the Plaintiff through its counsel providing the usual undertaking as to damages, an interlocutory injunction restraining the Defendant, until 3 May 2023 or further order of the Court, from:

a.   participating in, carrying on, assisting or otherwise be directly or indirectly concerned with, as a director, consultant, adviser, contractor, principal, agent, manager, employee, partier, any business or activity (including, but not limited to, Jones Lang LaSalle or any person or entity related to it) that directly competes with the Plaintiff; 

b.   undertaking any appointment, position or work for any person or entity (including, but not limited to, Jones Lang LaSalle or any person or entity related to it) that:

i.   results in the Defendant acting in any capacity in competition with the Plaintiff;

ii.   may create a potential or real conflict of interest with the employment of the Defendant by the Plaintiff; or

iii.   hinders the performance of the Defendant’s employment by the Plaintiff;

c.   attending the premises of the Plaintiff; and/or

d.   contacting any customers or clients of the Plaintiff or its related bodies corporate, as that term is defined in the Corporations Act 2001 (Cth).

…

8.   NOTES the undertaking of the Plaintiff through its counsel to the Court that it will continue to pay the defendant her salary entitlements under her contract of employment during her period of gardening leave.

16. The matter was listed for directions on 10 March 2023 to permit the defendant to make an application for the discharge of Order 5, and such an application was made on that day.

Relevant principles

17. It was not in dispute that in order to be entitled to (and maintain) the interlocutory relief in Order 5, the plaintiff bears the onus of establishing that there is a serious question to be tried for final relief; that damages would not be an adequate remedy; and that the balance of convenience favours the grant of an injunction on an interlocutory basis.

18. In a restraint of trade case, whether there is a serious question to be tried for final relief depends on whether it is seriously arguable that: (1) there is a valid contractual restraint; (2) there is a breach or apprehended breach of it; and, (3) the Court would, as a matter of discretion, grant injunctive relief in respect of that breach: John Fairfax Publications Pty Ltd v Birt [2006] NSWSC 995 at [5].

19. In the present case, the first of these matters is in dispute, but not the second or third. Generally speaking, an injunction will be granted to enforce a negative contractual stipulation, with damages rarely being an adequate remedy: John Fairfax Publications Pty Ltd v Birt at [45].

20. The principles relevant to the validity of restraint of trade clauses were not in dispute. The onus is on the plaintiff to show that the restraint goes no further than is reasonably necessary to protect the plaintiff’s legitimate interests. The validity and reasonableness of the restraint is to be determined at the time it is entered into (in this case, 12 August 2022), but when exercising its discretion to grant and fashion relief, the Court considers matters as at the date of the hearing which are relevant to the discretion to withhold relief: Birt at [46].

21. The effect of s 4(1) of the Restraints of Trade Act 1976 (NSW) is that in New South Wales a restraint is valid to the extent to which it is not against public policy, even if not in severable terms. The Court must determine first, whether the alleged breach (independently of public policy considerations) will infringe the terms of the restraint properly construed; second, whether the restraint in its application to that breach is contrary to public policy; and third, if it is not, the restraint is valid in its application to the alleged infringing conduct unless the Court makes an order under s 4(3) of the Restraints of Trade Act: Isaac v Dargan Financial Pty Ltd (2018) 98 NSWLR 343; [2018] NSWCA 163 at 355 at [61] – [63].

22. The legitimate interests which are capable of protection by a restraint of trade include the employer’s goodwill (including customer connection) and confidential information. However, an employer has no legitimate interest in merely preventing a former employee from taking employment with a competitor: Tullett at [47].

Serious question to be tried

23. The first issue is whether the plaintiff has established a serious question to be tried that the defendant has breached the restraint in cl 4.2 of the Contract which applies during her period of garden leave. It is clear that JLL is a competitor of the plaintiff and that if the defendant was to work for the plaintiff during the period of her gardening leave she would be in breach of cl 4.2. Two arguments were put by Ms Nolan, counsel for the defendant, in support of the proposition that the plaintiff has not established a serious question to be tried or, if it has, that it is weak.

23. First, the defendant argued that she is not bound by the 3-month notice period specified in cl 8.2(b), so that when she terminated the Contract she was only bound by a 1-month notice period. The basis for this argument was that when the defendant signed Schedule A, she was not aware that the terms of the contract of which it formed part were being altered, apart from her salary and commission entitlements (both of which had increased). It was also submitted that the defendant had negotiated an increase in her base salary and commission because of the increased fee income she had generated for the plaintiff, and not in return for giving more extensive restraints.

24. However, it is clear that where there is no suggested vitiating element and no claim for equitable or statutory relief, a person who signs a document which is known by that person to contain contractual terms, and to affect legal relations, is bound by those terms and it is immaterial that the person has not read the document: Toll (FGGT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165; [2004] HCA 52 at [57]. There is no suggestion in the evidence of any vitiating element (such as a misrepresentation by the plaintiff) or any claim for equitable or statutory relief. Hence, the defendant is bound by the terms of the Contract, for which the plaintiff gave good consideration, notwithstanding that she did not read it and it is irrelevant that no consideration was specifically allocated to the change to the period of the restraint in cl 8.2(4). Further, in so far as it was suggested that the defendant had only signed the 2-page Schedule A and not the entirety of the contract, it is clear that the cover letter from the plaintiff referred to [4(h)] above drew her attention to the fact that the entire document would replace her existing contractual arrangements and she signed on the only page where she could sign the Contract (which was the last page of it).

25. For these reasons, the defendant’s first argument is very weak.

26. Second, the defendant contended that cl 8.2(b) is void as an unreasonable restraint of trade because a 3-month notice period went further than was necessary to reasonably protect the plaintiff’s legitimate business interests in respect of its goodwill and confidential information.

27. In relation to customer connection and confidential information, the plaintiff relies on the evidence of Mr Molchanoff, the Head of Office Leasing, ANZ of the plaintiff with over 25 years experience in office leasing in the Sydney CBD and North Shore markets. His evidence can be summarised as follows:

1. The defendant is part of the plaintiff’s office leasing team which he leads, which has approximately 50 employees. At the time of her resignation, the defendant reported to the NSW Head of Office Leasing who in turn reported directly to Mr Molchanoff.

2. While working for the plaintiff, the defendant represented major clients of the plaintiff and in the course of doing so, developed significant professional and, in some cases, personal relationships with key contacts at those clients, including since she returned to full-time employment.

3. In his experience, success in the Sydney market for office leasing brokerage depends substantially on the personal relationships established between the broker, such as the defendant, and the client, and many of the clients for whom the defendant acted were repeat clients of the plaintiff.

4. Because of the nature of the defendant’s role at the plaintiff, in particular the relationships she had developed with clients she represented, it could take up to 12 months to find an adequate replacement to fulfill the defendant’s role, including the time taken to negotiate an employment agreement with that person and to take the necessary steps to have the replacement develop a relationship with the relevant clients with whom the defendant had previously worked.

5. During the period of the defendant’s gardening leave, it may be necessary to liaise with her in order to facilitate the steps referred to in the previous paragraph.

6. As part of her role, the defendant had access to the confidential information of the plaintiff: comprising tenders, pitches and submissions for client work; the completed deal register and research collateral; stacking plans and leasing timetables for client properties; knowledge around upcoming leasing/tenanting opportunities; and information produced by the plaintiff’s internal research team.

7. JLL is a direct competitor of the plaintiff in the real estate services business and in particular in the area of office leasing.

8. If the defendant were to utilise the confidential information referred to at para (f) above and/or the customer connections she has built up with clients of the plaintiff over the years, there would be prejudice to the plaintiff, particularly in relation to any open or ongoing tenders and otherwise allowing her to leverage those connections so as to take business away from the plaintiff for the benefit of JLL.

29. In addition, the plaintiff points to the defendant’s email referred to at 4(g) above where she stated that during the previous year (which I take to be the financial year ended 30 June 2022), she had written some $2.4m in fees for the plaintiff and that she considered that she would remain one of the top fee earners for the plaintiff, which is evidence of her strong personal relationships with clients of the plaintiff.

30. The defendant’s evidence in her affidavit relevant to these matters can be summarised as follows:

1. Head-hunting is common in the real estate industry, and still happens amongst all the competing firms, including the plaintiff. Indeed both Mr Molchanoff and herself joined the plaintiff in 2015 after being head-hunted from another firm in the office leasing industry.

2. In the commercial, particularly office, leasing market there are only around 8 firms which offer the type of work she is accustomed to, including both the plaintiff and JLL. The industry in which those 8 firms operate is small, with a limited pool of landlords and tenants. It is common practice within the industry for a landlord to use multiple agencies across their portfolio for particular leasing appointments to maximise their reach within the market and to access multiple occupiers.

3. In her 11 years experience in the industry, she has learnt that it is common for clients to request submissions from multiple agencies, subject to the vacancy and asset plans specific to the building being leased. Typically, all of the 8 firms referred to above are invited to pitch and it is common practice for a client to request an incumbent agent to re-pitch for their services.

4. In her role as an office leasing agent, the defendant liaises with the landlord’s internal property/asset manager rather than the chief executive officers, and deals at a building specific level rather than the overall portfolio level. She does not typically have a personal relationship with anyone at a senior executive level of the landlord companies, such as chief executive officers or chief operating officers. The focus of her work is on the leases, lease terms and specific information regarding the relevant building or premises for which she is acting as leasing agent, and not with the financial information or other sensitive information of her employer.

31. In my view, the plaintiff has established that there is a serious question to be tried that cl 8.2(b) read with cl 4.2 goes no further than is reasonably necessary for the protection of the plaintiff’s customer connection. First, the defendant is a senior employee of the plaintiff (with the title Director – Office Leasing) who, at the time the Contract was entered into, was a very significant fee earner for the business. The evidence indicates that she had developed personal connections with key personnel within clients of the plaintiff responsible for asset management and, while she may not have a personal relationship with senior executives at the level of chief executive officer or chief operating officer, that does not detract from the significance of the personal relationships which she did have with key clients of the plaintiff.

32. Second, an accepted approach to determine whether the period of 3 months in cl 8.2(b) is reasonable is to have regard to the period reasonably required to recruit and train a suitable replacement who could take over dealings with the employer’s customers and have an opportunity to win their confidence: Cactus Imaging Pty Ltd v Peters (2006) 71 NSWLR 9; [2006] NSWSC 717 at [36]; Label Manufacturers Australia Pty Ltd v Chatzopoulos [2022] NSWSC 1059 at [137]. In the present case, the evidence indicates that it would take the plaintiff at least 3 months in which to find a replacement who can re-establish the connection which the defendant had with its landlord clients.

33. Third, while the evidence of Mr Molchanoff regarding the defendant’s access to the plaintiff’s confidential information is at a fairly high level of generality, the Court can infer that her role gave her access to confidential information about tenders and other activities for clients which the plaintiff has a legitimate interest in protecting. It is established that a restraint on competition may be justified by the employer’s legitimate interest in protecting its confidential information: Woolworths Ltd v Olson [2004] NSWCA 372 at [67]. The information referred to at [28(f)] above is arguably confidential information which a non-compete provision can legitimately protect.

Balance of convenience

34. Turning now to the balance of convenience, it is necessary to consider what course is best calculated to achieve justice between the parties, bearing in mind the consequences to the defendant of the grant of the injunction in support of relief which the plaintiff might not ultimately obtain and the consequences to the plaintiff of refusing the injunction in support of relief which it might ultimately be held to be entitled: Kolback Securities Ltd v Epoch Mining NL (1987) 8 NSWLR 533 at 535. Relevant matters to be taken into account include whether damages are an adequate remedy; the defendant’s right to a livelihood, delay, the impact on third parties; whether the employee was warned and went into the position with “eyes wide open”; whether any hardship that would be visited on the defendant has come about because he or she is the author of his or her own misfortune; the strength of the case; and any undertakings that have been given: HiTech Group Australia Ltd v Riachi [2021] NSWSC 1212.

35. In relation to the adequacy of damages, it is rare that damages will be considered to be an adequate remedy where a negative covenant is sought to be enforced: see [19] above. Given the role of the defendant within the business of the plaintiff, there is a risk that damages will not be an adequate remedy.

36. In relation the defendant’s right to a livelihood and potential hardship, it is clear from her evidence that she has significant financial commitments. However, the defendant has given an undertaking that during the period of the defendant’s gardening leave, she will continue to be paid her salary and commission entitlements in accordance with the Contract, without any deduction in respect of amounts said to be owing by the defendant to the plaintiff, in respect of the retention claw-back or otherwise. Accordingly, the status quo in respect of her financial position as it was before she gave notice of her termination will be retained during the period that the interlocutory injunction is on foot.

37. While the defendant states in her affidavit that she believes she will lose her sign-on bonus and her job with JLL if she is unable to commence employment with JLL on 2 March 2023, this is not supported by any evidence of correspondence from JLL to that effect, nor is there any evidence from an officer of JLL as to its position. Given the fact that the interlocutory injunction only extends until 3 May 2023, and the evidence as to the defendant’s skills and ability which clearly attracted JLL since it has agreed to pay her a very significant sign-on bonus, I cannot be satisfied that a delay of approximately 2 months before the defendant commences employment with JLL is likely to lead JLL to terminate its contract with her.

38. In relation to delay, the defendant gave notice in writing of her resignation on 2 February 2023, and the plaintiff responded on 6 February 2023, with its letter of 3 February 2023 setting out its position clearly. There followed correspondence between the parties in which the plaintiff sought certain undertakings from the defendant which were not forthcoming, and led to these proceedings being commenced on 7 March 2023. This does not involve any material delay.

39. In so far as impact on third parties is concerned, the only relevant third party is JLL, which has entered into a contract to employ the defendant commencing on 1 March 2023. A delay of some 2 months in her starting date does not appear to be material.

40. As to whether the defendant was warned, and went into the present situation with her eyes wide open, the position is that the Contract is quite clear that the defendant must give 3 months written notice of termination of the Contract. While, according to her evidence, she was not aware of the change from a 1 to 3-month notice period in the Contract, that is something which she should have checked before entering into discussions with JLL and then terminating her Contract with the plaintiff. It seems clear that the defendant is the author of her own misfortune in so far as she is being required by the plaintiff to respect her contractual obligations to it. It is clear that the defendant was warned that the plaintiff expected her to work out her 3 months of gardening leave in accordance with the Contract (by the letter sent to her on 6 February 2023). The evidence does not establish whether this warning was given before she entered into her new employment contract with JLL, but this is not a matter which is in her favour in the balance of discretionary factors. The prudent course before resigning her position with the plaintiff and entering into a new contract to work for JLL would have been to check the terms of her contract to make sure that she was able to enter into the new contract with JLL.

41. In relation to the strength of the case, where the injunctive relief is likely in a practical sense to have the effect of granting final relief, the Court may analyse the strength of the plaintiff’s case: e.g. Kolback at 536. For the reasons given above, I do not accept the defendant’s submission that the plaintiff’s case is weak. The interlocutory relief only protects the plaintiff during the defendant’s 3 months of gardening leave and, for the reasons given above, provides reasonable protection for the plaintiff’s customer connection during the period in which it seeks to find a suitable replacement, and is not simply designed to prevent the defendant from competing with the plaintiff. The interlocutory relief does not seek to protect any of the post-employment restraints. While each case turns on its own facts, I note that a 3-month period of gardening leave for a broker in the financial services industry was accepted as reasonable in Tullett at [66].

42. In relation to undertakings, the plaintiff has given an undertaking to continue to pay the defendant’s salary and commission entitlements during the period of gardening leave and provides the usual undertaking as to damages should it fail to obtain final relief. The first undertaking preserves the status quo as it existed immediately before the defendant resigned. The second undertaking protects the defendant from her potential loss if JLL should terminate her new contract due to her inability to commence work on 2 March 2023 (see [37] above).

43. Taking into account all of the above considerations, in my view, the balance of convenience favours the grant of interlocutory relief for the period of the defendant’s gardening leave of 3 months.

Conclusion

44. For the above reasons, the plaintiff has shown there is a serious question to be tried that cl 8.2(b) of the Contract is valid. While the employer/employee relationship has terminated as a result of the defendant’s resignation, she is bound by the requirement to remain on gardening leave for 3 months. This is on the basis that the plaintiff has established that 3 months is a reasonable period for the restraints imposed on the defendant during her period of gardening leave. Also, in my view, the balance of convenience favours the grant of interlocutory relief to enforce that restraint.

45. Accordingly, the Court makes the following orders:

1. Application of the Defendant for the discharge of the interlocutory injunction in Order 5 made on 7 March 2023 is dismissed.

2. Order 8 made 7 March 2023 be amended to read:

NOTES the undertaking of the Plaintiff through its counsel to the Court that it will continue to pay the Defendant her salary and commission entitlements under her contract of employment during her period of gardening leave, free from deduction or withholding on account of any monies said to be owing by the Defendant to the Plaintiff in respect of the retention payment claw back referred to in the Plaintiff’s letter dated 3 February 2023, or otherwise.

Procedural Orders

3. The Plaintiff to file and serve any notice of motion and supporting affidavit evidence seeking expedition of the proceedings by 5:00pm on 14 March 2023 (Expedition Application).

4. The defendant to file and serve any affidavit evidence in relation to the Expedition Application by 5:00pm on 16 March 2023.

5. By 5:00pm on 16 March 2023, the parties’ legal representatives to confer and attempt to agree on a timetable for the preparation of the matter to trial and an accurate estimate of the necessary hearing time, on the assumption that the Expedition Application is successful.

6. The Expedition Application be listed before the Expedition Judge on 17 March 2023.

7. Costs in respect of the application for discharge of the interlocutory injunction be costs in the cause.

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Decision last updated: 14 March 2023