Elders Rural Services Australia Ltd v Gooden
[2014] QDC 5
•15 JANUARY 2014
[2014] QDC 5
DISTRICT COURT OF QUEENSLAND
CIVIL JURISDICTION
JUDGE RYRIE
No 12074 of 2013
ELDERS RURAL SERVICES
AUSTRALIA LIMITED and OTHERS Applicantsand
ANTONY JOHN GOODEN Respondent
BRISBANE
2.57 PM, WEDNESDAY, 15 JANUARY 2014
JUDGMENT
HER HONOUR: Okay. This is a decision in the matter of Elder Rural Services Australia Limited & Anor v Gooden, G-o-o-d-e-n, Supreme Court file number 12074 of 14. This is an urgent application that was transferred yesterday from the Supreme Court, remitted back to the District Court in order that it could be dealt with by this Court. Consequently, the deadline required primarily to have this matter dispensed with in an expeditious fashion because of the very nature of the application itself. That application, of course, is an application for an interlocutory injunction to restrain Mr Gooden, the respondent, in relation to this hearing, a former employee of the first applicant, from breaching negative covenants in the contract of employment under which the first applicant until recently employed the respondent.
By way of background, the respondent was employed in various positions with the first applicant’s business for many years, approximately 27 years in total. However, in 2012 he was promoted to a senior position, namely Senior Marketing Manager, International Live Export, with the first respondent – sorry – first applicant’s business, International Live Export Division, pursuant to term of an agreement that was entered into between the parties on the 1st of October 2011, here and after referred to as the contract. That promotion entailed, as it were, an expansion of the respondent’s responsibilities, namely, he was receiving increases in salary and other arrangements were also provided.
He was also a senior sales representative in a team that was employed by the first applicant to run, as it were, aspects of a live export business insofar as livestock. That employment continued up until a point where the respondent by his own choice resigned to take up a position with a potential competitor, namely, Ruralco, R-u-r-a-l-c-o, Holdings Limited, here and after referred to as Ruralco. The respondent, together with six other senior employees, who together comprised all but one of the sales trading team employed in the business already mentioned resigned to take up employment with Ruralco. Ruralco operates as I understand it in the agricultural industry, and while it competes with some of the applicant’s businesses, it did not until recently seek to become involved in the export of cattle or other livestock in competition with EIT.
EIT is short for Elders International Trading, which is involved in the exporting of the animals procured by the Australian Elders Network. There is evidence available that I don’t think is contested to suggest that Ruralco was gearing itself up eventually to compete in some respects with EIT. It would appear that Ruralco was and is intending to obtain an export licence to, as a consequence, to set up a live cattle export operation, and, indeed, that by way of background earlier in 2013 there’s no dispute, again, as I understand it, that Ruralco had made and then withdrawn a bid to in fact acquire EIT. The purposes of that bid, and it’s important to understand some background as it related to it, that Ruralco had been given some access about EITs business, and, indeed, the sales trading team as it existed. The respondent’s notice expired on the 27th of December 2013. He had indicated previously that he was intending to take up employment with
Ruralco well before that date. Indeed, his intention as evidenced by him was to start working with Ruralco on about the 6th of January 2014. However, as a consequence of proceedings being commenced prior to him finishing with his employment by the applicant he gave certain undertakings not to do so, that is, to start working for Ruralco before the 15th of January 2014. Thus, the reason why this matter is one of expediency and is of the nature of urgency because – since the respondent has left his employment on his own accord with the first applicant, he has not been able to commence employment with Ruralco, and in fact the current undertaking he had given originally was that he would not do so before today’s date, 5 pm.
Turning then to the application itself, the basic principles which govern an application of this nature is set out in the decision of Australian Broadcasting Corporation v O’Neill (2006) HCA 46, more particularly, at paragraph 19. As stated there, in all applications for interlocutory injunction the Court will ask whether the plaintiff has shown that there is the serious question to be tried as to the plaintiff’s entitlement to relieve, (2) as shown, that the plaintiff is likely to suffer injury for which damages will not be an adequate remedy, and (3) has shown that the balance and convenience favours the granting of an injunction.
In addition to those principles, which are well-known, it is also important to note that in an application such as this on an interlocutory basis, a plaintiff has to show that it has made only a prima facie case in the sense that if the evidence remains as it is there is a probability at the trial of the action the plaintiff will be held to be entitled to that relief, and that is the situation insofar as this application. The first point that needs to be dealt with is a matter that has been raised by the respondent, insofar as whether or not this is an application seeking really, final relief, or is in the nature of final relief. If indeed that submission is correct, then it follows that the application should be dismissed. The respondent in making a submission in respect of this matter referred to the authority of Complete Field Maintenance Proprietary Limited v Coulson, tab 3, respondent’s case authorities in support of its submission in this respect.
In that case, it was determined that relief would be in the nature of final relief, and therefore any relief being sought on an interlocutory injunction basis should be refused because of the very nature of it. However, it must be immediately emphasised that that case and the factual basis upon which it was decided was decided for reasons not present here. In that case, Mr Coulson’s current role was very different to that to which he was previously engaged. He previously had been engaged as a general manager, whereas in his later employment to which he was currently employed at the time of the hearing of the application he was a heavy fitter in heavy fitting machinery only.
There was no suggestion at all there that any confidential information which he had obtained when he was previously employed as the general manager for the previous company would in any way be used or communicated or indeed be at risk of being used for the purpose of breaching any confidentiality in respect of it. That was, as the Court indicated, because of the fact that his position was entirely different and
was of a different nature to that of the contact and the role that he carried out as a general manager, as opposed to simply being a heavy fitter, machinery person. The Court also in addition to that point noted that because he was currently employed with the latter employer that the nature of the interlocutory injunctive relief being sought would terminate that employment, that is, he wouldn’t be allowed to stay in that current employment, and that in itself would have, as the Court described, the nature of being one of final relief.
It was also noted in that case by the trial judge that it may not have – the trial itself in relation to the final relief being sought may not have been heard before the expiry of the restraint clause, which, as I understood from the case, was 12 months from the date of the termination of his employment. There are distinguishing features in relation to those cases here. First of all, the restraint period in this case can be anywhere between 24 to six months, which is different. It doesn’t have the consequences of, if interlocutory relief was granted to terminate his current employment because the respondent has not in fact started with Ruralco as at this time. Secondly, the role which Mr – the respondent in this case is intending to take, cannot be described as being different to that to which he previously engaged. Whilst it might well be with a different company it’s still of the very nature insofar as the work that he would be performing in the area of which he is familiar with and had worked, and indeed couldn’t be described as being one of general manager previously to one of heavy fitter, machinery worker, as Mr Coulsen was in the authority referred to by the respondent.
Also, in the matter of Complete Field Maintenance Pty Ltd v Coulsen, it was readily calculable that damages would appear to be able to be calculated. I am not as confident here that it is as apparent as the finding made in that case. Indeed, the affidavits from the applicant say as much, even taking into account the objections that have been made and raised by the respondent in respect of some of those affidavits, which I’ve taken into account. There’s also no evidence before the court which shows that the respondent in this case can’t take up employment with Ruralco at a date, once the restraint period may well, if it’s found to be valid, expires, whether that be for a period of 24 months or indeed six months as the case may be.
It is also now the position, having now received notification from listings of this trial, is not one that would be put off in the distance. This trial is now capable of being heard from the 10th of February of this year thereof with four days being allocated in the list to accommodate it because of the expediency required and the urgency in respect of it, in respect of the final relief being sought. Consequently I am not persuaded, because of the submissions that are made by the respondent, that this interlocutory application is in the nature of a final relief being sought or, indeed, is actually obtaining final relief. In other words, I do not accept the submission that’s been made on that point for the reasons already referred to.
If I can deal then with the applicant’s primary submission which is contained in the outline of submissions that have been helpfully provided by both counsel? The
applicant’s outline of submissions, marked exhibit 1 and the respondent’s outline of submissions, marked 2. It must be immediately said by me that those submissions by counsel provided, and the references that they have given to the evidence, of which I have perused and read with the benefit of today, together with the authorities referred to, have assisted me greatly in being able to get out a timely decision which I consider is appropriate for the parties, in light of the fact that this is an urgent application in the nature of it being sought which impacts upon both parties.
The applicant’s primary submission is that, because legal advice was taken by the respondent in respect of the restrictive covenants contained in clause 19 of the contract, that that fact supports sufficient prima facie justification for the restraints being demonstrated before this court. It’s accepted by both counsel, as I understood their submissions to me, that such a case is not and can never be determinative of the present matter before the court. It cannot be said that simply taking legal advice in respect of those clauses, as the respondent did here, that that somehow makes good the restraints that are being sought to be relied upon by the first applicant insofar as the character of their validity or their reasonableness.
As properly indicated by both counsel during submissions, the overriding consideration in respect of covenants, insofar as restraints of trade, it is always whether any such covenant taken, in this case at the commencement of one’s employment, which brings into effect, as it were, at the end of one’s period of employment, is a reasonable one. The cases and the authorities I’ve been referred to support that finding. UGL Rail Service v Harris at paragraphs 85 and 89, as well as NSW Court of Appeal in Sedemeneo, S-e-d-e-m-e-n-e-o Pty Ltd v Alexander [2011] NSW court of appeal CA418. In other words, one has to be satisfied that the covenants seeking to be relied upon by the first applicants are reasonable in their terms because all covenants insofar as restraints of trade are void until they are shown to be – unless shown to be reasonable.
For the reasons that I’ve already stated, it has to be said that it is immediately apparent that I cannot accept the primary submission that has been made by the applicant, that the respondent’s express contractual acknowledgment of the reasonableness of the restraints agreed to by him in writing, after taking legal advice or receiving legal advice, means that the applicant has therefore established a prima facie justification for those restraints. That is simply not the law. The real question in my mind to be answered in relation to this application on this point is whether prima facie the applicant has shown that such restraints are justified to protect its legitimate interests and whether or not those restraints are reasonable, a fact that was properly observed by both counsel during their oral submissions made before me.
It is, however, a factor I can take into account as one of the many factors that must be taken into account when determining a matter such as this, particularly insofar as the overall ultimate decision to be made. It then means that I should turn to the applicant’s second submission in light of the fact that its primary submission has not
been maintained. The applicant relies upon two bases to support its contention that there is other evidence that demonstrates prima facie, that each of the restraints are justified and therefore reasonable. The two grounds of which they rely upon are confidential information and the value of relationships which the first applicant has had with its clients, of which the respondent received the benefit during the course of his employment. Each of the clauses has been addressed individually.
Clause 19(1)(A) considered to be restraint of competition – the applicant says that, in this regard, it is justified and the restraints are reasonable. The applicant says that it’s clear on the evidence available that the respondent was intending to take up employment with Ruralco, a competitor, and will be working in its new live export business, particularly as it relates to sales. Indeed, the respondent says as much in his own affidavit – see document 8, paragraph 37, paragraph 44, 53 and 54 respectively. In my mind this evidence supports a conclusion that Mr Gooden, the respondent, will be indeed working in similarly the same field as he was before his resignation with the first applicant, and therefore will be working for a competitor in an area of which he is familiar, of which he has had access to the workings and information surrounding the first applicant’s business insofar as live export business.
Notwithstanding a finding to that effect by me, as properly submitted by counsel for the respondent, it’s not enough to simply show that clause, 19(1)(A), will prevent simply the respondent from going into competition in order to make that covenant reasonable. Rather, quite properly, as counsel for the respondent says, [indistinct] what the applicant must show is that it is necessary that such a covenant is required and justified to protect something. In this case, legitimate business interests. The respondent’s position is that all that clause one-nineteen-one-A is designed to do is to prevent the respondent from simply going and working for another competitor of the applicant – of the first applicant – and nothing more. And, therefore, any reliance upon it means it should fail, because it’s neither reasonable or justified and, indeed, only goes simply so far as to prevent competition, as opposed to what is required to be shown, namely that it is necessary and is justified in order to protect legitimate business interests.
The applicant, on the other hand, says that Mr Gooden, the respondent, was the senior member of the IT sales trading team. He had access to its costs and pricing structures, the terms of trade, the client contacts. And the applicant has set out in paragraph 33 of its outline – exhibit number 1 – relies upon the evidence which is contained therein of Jackson, Reynolds and Underwood, who refer to the respondent’s contact and knowledge received during the course of his contact in respect of those matters in his role as senior member of the international trading sales team for Elders.
I have taken into account, when looking at that evidence as I’ve just referred to, the objections in relation to some of the material raised. Even giving due regard to the objections that have been raised by the respondent in addition to the evidence I’ve
just referred, exhibit confidentially marked PJU1, part of exhibit 3, supports a conclusion that the respondent was well aware of the confidential information at least relating to a period that will encompass after he left his employment and, indeed, even before. It also supports a conclusion – exhibit 3, and the affidavit material to which I’ve referred, which is set out in paragraph 33 of the outline of the applicant – that he was also exposed in his role as the senior sales member – a manager of a team in live export, for the first applicant’s behalf, up to a date where even when he finished he was still receiving and au fait with confidential information.
Indeed, the respondent says as much in his own affidavit, and evidences that fact by the concerns that he has expressed in his affidavit regarding any subsequent dealings, that he was required to have with certain clientele in respect of confidential information which he believed he was receiving, even after he’d given notice to the company that he would be leaving. And, indeed, puts in his own affidavit that he was having concern himself about being in receipt of certain information because of the fact that he may well have subsequent dealings that involved some of those matters, even after he’d left the applicant’s employ.
Clearly, then, that that evidence to which I’ve already referred suggests, that the senior member – namely, the respondent in this matter of the EIT’s sales trading team in relation to livestock export – did, in fact, have access to confidential information that related to cost pricing structures and the like, terms of trade and the nuances, as it were, insofar as client contact and availability, insofar as contracts for which were being obtained. That is evidenced as much by the respondent’s awareness of the period as it relates to January to March 2014 period, which is a period subsequent to when he left the employment of the first applicant. Certain information also is said to have – will remain current insofar as its confidentiality and applicability, as evidenced by Mr Reynold’s affidavit, namely paragraphs 31 and 36 and paragraphs 32 respectively, and documents numbers 5 and 4.
Objection was taken to these assertions by Mr Reynolds in his affidavit by the respondent, namely that they were vague regarding lack of currency of such information. In other words, the respondent was saying that it was so vague that one cannot glean from it whether or not the information that is said to have come into the possession or knowledge of the respondent during the period of his employment – particularly the latter period – could be said to have any currency in the future, which would have any effect upon the first respondent’s ability to protect its legitimate business interests.
I’m unable to accept that submission. That submission, in my mind, overlooks the detail which had been provided by Mr Reynolds in respect of the pricing levels, costing calculations and the like that were referred to in significant detail in paragraph 34 of his affidavit which, in my mind, supports a reasonable conclusion being drawn that the information detailed would remain relevant over the impending period of, at least, six to 12 months or more as he deposed. Indeed, Mr Gooden’s – the respondent’s own evidence on this point regarding his ongoing contact with clientele in the future also allows a reasonable inference to be drawn that he would,
in fact, have available to him confidential information that would directly, in my mind at least, conflict with that of the applicant’s legitimate business interest of which he had obtained information in his role that would impact upon protecting the confidentiality of it and, subsequently, the possibility of him then coming into contact with others, of which he would be unable to simply put out of his mind information that he’d received in respect of the first applicant’s confidential arrangements both internally and, more importantly, with their contact with clients.
The same, therefore, can be said in respect of the protection of the relationships with the respondent has developed with the applicant and its clientele. The importance to the applicant is set out in paragraph 34 in its outline – exhibit 1. And this is relied on, especially as it relates to the shipment by shipment basis and the importance of which is acknowledged by Mr Gooden himself. Objection was taken by the respondent to some of this evidence as being, once again, vague and failing to identify the currency of such information. Once again, it was submitted that there was no way for this Court to know with certainty whether or not the information that had been received by the respondent during the course of his position – even in the latter part of his employment, or at least for the two years he was working as the senior manager in livestock – would in some way, then, be imparted subsequent to him leaving and, indeed, taking up employment with Ruralco.
It has been recognised that it is legitimate for an employer to protect both customer connections and its confidential information and out of restraint may be justified as protecting more than one legitimate interest at any given time. That is said as much in Emeco International Proprietary Limited [indistinct] tab 2, applicant’s cases, paragraph 37, 38 and 39. Even taking into account that principle as enunciated, nevertheless, the onus still lies on the applicant in this case to show prima facie circumstances from which it can be inferred that the restraint of trade clause was reasonable to protect their legitimate business interests. Otherwise, the clause will be struck down as void.
I find on the evidence that’s been provided that there are sufficient circumstances from which it can be inferred that the restraint of trade clause is reasonable. Mr Gooden was the senior member of the team in the international export area since November 2012. He was the senior marketing manager involved in the field. He had contact with various customers for that purpose. Whilst he may not have been the sole contact, that is not decisive. The confidential exhibits that have been marked collectively as exhibit number 3 show such contact and the intimate knowledge that he obtained in that role across various regions. It wasn’t just restricted to Australia and Indonesia. The evidence from the applicant witnesses also say as much.
The respondent submits that Mr Jackson’s evidence was vague and lacking in currency with information. That submission, in my mind, overlooks the recent communication subject of the confidential exhibits to which I’ve just referred. The fact that such information was within the knowledge of the respondent, even towards the end of his employment, and information that would be relevant, in my mind, in his new role with Ruralco, particularly as it relates to the export livestock
business that is potentially being set up in the near distant future. The respondent says that Ruralco only actually is intending to commence export operations in the same field as which the respondent previously worked for the first applicant as early as, and only as early as April 2014.
Well, that may in fact prove to be true; it nevertheless does not overcome the real risk in my mind that the information, which has already been obtained in the contact with clientele for which the respondent has obtained during the course of his employment, nevertheless will still place the applicant’s legitimate business interests in jeopardy in the future. Whether that be even before Ruralco starts up or even after it starts, it has to be said that to commence a new business such as Ruralco is attempting to do as evidenced by what Mr Gooden said himself as the respondent in his affidavit, that a licence may well be required to commence that operation at a certain period.
Nevertheless, in the meantime it’s a reasonable inference that can be drawn, that anything that can be done in order to start work on that day when the business starts to commence that operation is one that one would presumably assume would be matters that would be started well before the due date is due to commence. There is no reason to consider that the information in the possession and knowledge of the respondent, and the contact with the clientele and the nature of the information that he has an awareness of, as it relates to the first applicant’s business in livestock export, wouldn’t be available to him for the purpose of utilising if he was to start commencement of employment even before Ruralco commenced operations actually under licence, as he has submitted in his affidavit from about April 2014.
On the evidence that is available to me, I’m satisfied that there has been a demonstration by the first applicant that the restraint clauses being sought are justified, and that the period that is being sought is reasonable. It does not prevent Mr Gooden from not taking up employment with them in the near distant future once any relevant restraint period, if deemed to be valid, expires. Another matter was raised by the respondent that should be addressed that relates to the construction of the relevant clauses as they appear in section 19 themselves. A substantial part of the respondent’s helpful submissions, exhibit 2, were directed to the question of uncertainty as it relates to those terms, and relating to the clauses themselves, the focus in relation to those submissions related to the definitions of ‘restraint area’ and restraint period as contained in the contract of employment insofar as they appear and are relevant for clause 19.
As noted in Bradto v Victoria (2006) 15 VR 65, all that is needed for the purpose of this application, being interlocutory in its nature, is that the applicant’s construction is one that’s seriously arguable. In other words, if I’m not satisfied that it’s not then the respondent’s submission on this point may well be a valid one to defeat the application before me. It has to be immediately said that the interlocutory application before me has now been amended, which is evidenced by paragraph 2. It now restricts the interlocutory relief being sought to the regions of Australia and Indonesia only, as opposed to initially when it did not. The applicant says that it was
appropriate to do so given the true construction and plain meaning that it ought to be given to the restraint area definition contained in the contract itself.
The respondent on the other hand says it was nonsensical as it relates to the restraint area definition because if (a) in the definition of restraint area failed, then (d) is broader by its very definition, and therefore cannot be maintained. While I accept the respondent’s submission on this point, the situation now is that the interlocutory application being sought only relates to Australia and Indonesia. There is, in my mind, sufficient evidence available which supports in any event the reasonable conclusion being drawn that the present evidence shows a connection between the applicant’s business and its customer locations in those regions. Mr Gooden even acknowledges that fact himself, particularly as it relates to Australia and Indonesia.
So confined, this has the effect of course as noted by the respondent in submissions that it would prevent the respondent from working for Ruralco relating to Australian and Indonesian operations, at least until any requisite restraint period, if found to be valid, is operating, which currently in its current form, if one looks at the restraint period as defined in the definitions in the contract, can be anywhere between 24 months and six months. While it’s accepted by me that it’s not decisive, the respondent’s own acceptance of the covenants to be imposed can be taken into account as a significant factor by me in determining this matter; Queensland Co-op Milling Association v Pamag (1973) 133 CLR 260 to 268 says so.
In that case, it was noted if parties are on equal footings, which they are here, where benefits are exchanged, which was the case here, where legal advice was given and taken, which was here, then whilst that fact in itself doesn’t displace that even though he entered into – that the covenants, it does not in any way make them reasonable, it does allow me to take into account whether he entered into the employment with advantages. Clearly, here, I find that there was a benefit for Mr Gooden to enter into the arrangements, even notwithstanding that he says that he received legal advice that said the covenants as he understood it were unenforceable. The fact that he received such advice, that fact alone does not in my mind in itself displace the fact that he still nevertheless entered into the employment regardless, and did so to obtain advantages.
The respondent says that the effects are of the restrictive covenant, particularly as it relates to restraint of trade, that the true effect of it will be that he won’t be able to work for any competitor of the first applicant. The respondent’s submission in that regard may well in fact be correct. However, it has been noted before by the Courts that the consequences that flow however can occasion hardship to an employee who accepts employment with competitors after they have signed previous restrictive covenants with the former employer. As observed by Edelmen J in Emeco, tab 2 of the applicant’s case – it’s paragraph 59 – an employee runs that risk of enforcement of a restraint if in fact they have entered into one.
In other words, if they want to resign from that employment after having signed such covenants or accepted such covenants, which is the case here, they may well run the risk if they accept employment with other competitors that it may occasion hardship
if the point is taken, which is in fact the case here. To avoid such a hardship, the applicant says that the exposure by the respondent has been of his own making in some sense. Potentially, if the restraint is not enforced, then what it potentially does is, it exposes the applicant to the protection that was afforded by potentially valid restraints and it being left with a claim that, on the face of the evidence, may well mean that damages in any such claim as a remedy against the respondent for any potential breach, may well be inadequate. The respondent continued – also argued that the other restraint clauses, like clause 19(1)(A), that are being sought in the interlocutory injunction are also so ill defined that it should also be deemed to be void for uncertainty.
After carefully looking at each of those clauses, in my mind, on their face and on their plain meaning, they are sufficiently clear insofar as their intended purpose, particularly when one has regard to the relationship of it with section 19(1)(A) or indeed in their own right. The respondent referred me to Stenhouse v Phillips, page 6, which is privy council decision number 4 of 1973 for the fourth – the last sentence of the first paragraph of page 6, which is that the presence of one restraint diminishes the need for others or another, or at least increases the burden upon the applicant who seeks to have the covenants enforced to justify those others.
Whilst I accept that that is the law as enunciated in Stenhouse, nevertheless, the evidence available still supports a reasonable conclusion that the applicants have shown, at least to me, a prima facie basis that the covenants should all exist together in order to protect its legitimate business interests and particularly its – as it relates to confidential information and its interrelationships with clientele and it is my view that the inclusion of all of the restraints sought are, in fact, necessary in order to allow for its legitimate business interests to be protected in that regard.
The respondent, Mr Gooden, himself considered and acknowledged in his own affidavit that any future contact that he might have with certain clientele in his new position with Ruralco and any confidential information that he’d recently come into possession of while he was working with the applicant, was in fact something of concern to him. That, in my mind, evidences sufficiently at least from a prima facie basis that the restraint of trade, as contained in clause 19(1)(A) together with the other clauses being sought for solicitation and the like in the other clauses by the applicant, do give rise to a real potential concern or risk that that information may well impact upon protection of their legitimate business interests if the respondent was to take up his employ with Ruralco as at the 15th of January 2014.
The authorities of Jardine – Jardin, J-a-r-d-i-n v Metcash Limited [2011] 214 IR 448 at 91 and Emico number 2, paragraph 69, tab 3 of the applicant’s cases, authority for the proposition that it is – has been established that a restraint may be justified as protecting more than one legitimate interest. It can protect, for example, customers with whom an employee has had a close relationship with in circumstances in which the employee has had confidential information, or access to it, and can involve a restraint on dealing with those customers could be justified as reasonably necessary to protect those interests. In this case I consider that the restraints that have been
sought under all of the clauses to some degree go hand in hand and that – are necessary to prevent the respondent from misusing that information of which he has had the benefit of up until, pretty much until he left the employ of the first applicant.
The respondent also raised in relation to the question of the undertaking that has been proposed by the respondent as being suitable as covering, as it were, or affording the sufficient protection to the applicant. The applicant, however, says that it could lose its protection of the competitive restraints if granted on those terms in accordance with the undertaking that’s been proposed by the respondent and that particularly damages would be incalculable in any event if the injunctive relief being sought is not granted.
The applicant also says that any undertaking that has been provided by the respondent in any event, is limited insofar as it does not cover all the clients which the respondent has had contact with during the course of his employment or was privy to, and indeed, insofar as the information to which he was – had received or was involved in with those clients, whether or not indeed he was the sole contact or otherwise, the applicant points to the fact that he was the senior manager of a team working for him and he was regularly informed, not surprisingly, by email and the like by meetings of contacts that were occurring with all clients which the respondent had had contact with during the course of his employment and, or was privy to because of his role.
Those clientele, it’s clear from the evidence that’s available before me, include those that are even outside of Australia and Indonesia. Mr Gooden, in his affidavit, even deposes to the fact that he had contact with certain clients that weren’t necessarily just restricted to Australia and Indonesia in his role. The respondent also says that the question of prospective clients as contained in the covenants that are being sought, are too broad. The orders sought – Mr Moses says, doesn’t define who the prospective clients might be of the first applicant and therefore are uncertain and shouldn’t be made in those terms.
That submission, in my mind, however, overlooks the orders that are being sought which limits, on its face, to what are prospective clients who have been identified, of which the respondent was either introduced to or indeed the respondent carried out work in connection with, in the 12 months before he left the employ of the first applicant. It’s therefore not open ended or – as proposed by the respondent so inside that it can’t be determined who they might even be. The order is limited to those who the respondent, as I’ve said, has had contact only with in those terms. Having determined in my mind that the – there is a serious question to be tried as to the applicant’s entitlement to relief, that the applicant has shown prima facie that there is a serious question to be tried, it now also requires me additionally to consider whether the applicant is likely to suffer injury for which damages will not be an adequate remedy.
I am satisfied, because of the nature and the extent of the business of the first applicant, that damages would not be an adequate remedy. It would be incalculable
to know what potential breach by the respondent of the information and clientele contacts of which he obtained from the first respondent during the course of his employment, might well be utilised. In other words, it would be difficult, in my mind, in any true sense, to be able to calculate any such damages. The potentiality of any breach is one that would be difficult to try to, as it were, work out what damages would result that could be calculated or might well be adequate.
The undertakings that have been provided by the respondent to account, as it were, for records and profits and the like, in my mind doesn’t in any way overcome the difficulty that the first applicant would have if in fact a breach took place insofar as any confidentiality which would have – or client contact that would impact directly upon the ability of the first applicant to know, even to what degree or to what extent, it has impacted upon their legitimate business interests. For that reason I’m satisfied that it’s – that the applicant would be likely to suffer injury for which damages would not be an adequate remedy and would not be readily – be able to be calculated in any forensic sense. A final question of course separately to be considered, is the balance of convenience. Does it favour the granting of an interlocutory injunction?
In this regard the respondent raised several points that reflect upon the respondent and himself, the financial consequences as deposed to in his affidavit against those of the consequences to the applicant. In this regard the applicant says, well, he can and will be compensated by damages that has been provided by way of an undertaking in relation to this application. He also has not lost, as the applicant says, the opportunity for employment with Ruralco, merely is prevented from taking up employment at present with them. The evidence that is available in my mind shows that the first applicant would lose potentially the protection of the potentially valid restraint clause if the undertaking that’s been offered by the respondent was allowed, or indeed if this interlocutory application was dismissed.
The fact of hardship by the applicant himself gets back to a question of the fact that he has taken to remove himself from his employment. He entered into, as I said, while more decisive is a factor I can take into account, clauses that he was aware, after receiving legal advice and even before, that he was a person who was restrained from entering into employment with a competitor of his former employer, the first applicant. The respondent raises, for the balance of convenience issue, the fact of other employees not having non competition restraints, similarly to that that’s been imposed upon the respondent. Even with the paucity of evidence that’s available on this point, it cannot be said to be conclusive that the restraint clause that he accepted as part of his employment contract is therefore invalid simply because other employees did not have to sign similar restraints.
Mr Gooden, the respondent, was a senior employee in a team of workers which, in itself, by his very position, have given rise to the requirement that was placed upon him to receive the non competition clause as opposed to others that were not requested of it. The respondent also referred to the payment upon termination that was made to him. While I agree it was not of the type described in the decision of Miles – tab number 7 in the applicant’s authorities – as it related to a redundancy
payment that Mr Miles received, nevertheless the competing interests of the parties allows this Court to nevertheless take into account any payment of which the respondent received at the end of his employment insofar as when determining any ongoing hardship, and the balance as it were between the parties for the purpose of balance of convenience and the question that needs to be answered.
In my mind, the balance of convenience and the question favours the granting of an interlocutory injunction. I do not consider for the reasons that I have stated that damages would adequately be able to be compensated to the applicant, if the interlocutory relief was not granted. As discussed in Emeco – tab 2, applicant’s case law, paragraphs 20 to 22 - adequacy of damages, particularly in the context of injunctive relief or apprehended breach of a restrictive covenant, is generally – it’s a rare case in which relief will be declined on the basis that damages are a sufficient remedy, and that’s at paragraph 20, and the reasons are set out in that authority why damages are often inadequate in such cases, and they include the difficulty of detection of breaches of obligation, the difficulty of establishing causation between any loss of business with customers and any action of an ex-employee, and the difference of calculation, the quantum of the damages arising from any such loss of business and the like.
Consequently, I am of the view that for the reasons that I just reiterated from the authority of Emeco that they apply here. There was some concern by the respondent that the trial of this matter to be finally determined would be of a time in the future; could be anywhere between six to nine months, or even more, in this Court. The fact is now obviated by the fact that I have obtained a trial date set for four days to commence from the 10th of February and thereafter for each and every day for the trial of this matter. That will allow the parties, who have indicated that they are ready to proceed in a timely way once their cases can be placed in order and witnesses organised, that four days that I have found through the Court’s listing process would allow for that process to take place in a timely way.
There was also the final matter of delay that was raised by the respondent, referred to in the outline of submissions, exhibit 2. The respondent says that there was delay in bringing the proceedings, and that anyone who sits on their laurels in relation to equitable relief without an explanation for delay should not be entitled to such relief. The applicant, on the other hand, says that proceedings were actually commenced before the employment of the respondent was even terminated. And that in fact appears to be correct. There was also an adjournment that was made by consent by the parties I see, which also evidences that any delay in having the matter heard after it was filed is not attributed to any particular party. I’m not convinced that there is evidence sufficient enough to justify that delay would be sufficient to defeat the application that is before the court. Accordingly, I consider an interlocutory injunction should be granted in the terms that have been set out in the order that was helpfully provided to me yesterday by the parties.
The order however, needs some adjustment insofar as and in addition to 6 and 7. The orders of the court shall be 1 to 5 as set out in the orders I received yesterday.
There will be a further order of (6) the trial of this matter is to be set for four days, such hearing to commence 10th of February 2014, (7) that exhibits 3BJU-1, SPR-1 and NGJ-2 be marked as confidential exhibits and not be disclosed without prior order of the court, or unless by agreement between the parties. The other orders 1 to 5 inclusive as they appear in the order that was given to me yesterday shall be made in addition to those that I’ve just read into the record, namely 6 and 7. I’ve received just now the order of the court seeking that exhibit number 3 be placed in a sealed envelope.
I’ll make that order as well. And the usual undertaking that was to be given by the parties is also noted by the court to also be placed on the file which I’ve now received. No submissions relating to costs are necessary, simply because of the fact that costs of the application is sought as being reserved. The interlocutory injunction will be obviously enforced up to the date of the hearing of the matter that’s been set down for the 10th of February 2014 in this court to commence. Unless required, the parties will have liberty to apply if required if there is some reason that that matter is delayed or cannot commence on that date. However, the time has been found available for the relevant parties and I ask that they, as they indicated to the court yesterday, be willing and wanting to have this matter brought on then.
Finally, my reasons have been given as quickly as possibly able in order that the deadline could be met for the parties. I have taken into account the authorities that have been given to me and the helpful submissions and indicate that the reasons have been given in the fashion unlike what I would usually do where I would publish them in writing. I have done it in this form in order that it could facilitate this matter being resolved quickly for the parties which they were so desirous of yesterday, of which I’ve accommodated. That will be the orders. Okay. That’s it.
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