Emeco International Pty Ltd v O'Shea [No 2] - [2012] WASC 348

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CIVIL

CITATION: EMECO INTERNATIONAL PTY LTD -v- O'SHEA [No 2] [2012] WASC 348

CORAM: EDELMAN J

HEARD: 4, 5 SEPTEMBER 2012

DELIVERED : 20 SEPTEMBER 2012

FILE NO/S: CIV 2310 of 2012

BETWEEN: EMECO INTERNATIONAL PTY LTD
Plaintiff
AND
BRENDAN O'SHEA
Defendant

Catchwords:

Restraint of trade - Employment contract - Non-competition clause - Non-solicitation and non-service of client restraints - Employee resigning and entering employment contract with competitor of former employer - Whether employee can be restrained from competition, solicitation or service of employer's clients - Effect of words in restraint permitting release from restraint with the prior written consent of the employer - Restraint against employment with a competitor reasonable - Non-solicitation restraint and client restraint unreasonable - Injunction to be granted in terms to be decided

Legislation:

Nil

Result:

Injunction in terms to be decided

Category: A

Representation:

Counsel:

Plaintiff: Mr K J Mony De Kerloy
Defendant: Mr T Saunders (4 September 2012) Mr I Neil SC and Mr T Saunders (5 September 2012)

Solicitors:

Plaintiff: Freehills
Defendant: Keystone Lawyers

Case(s) referred to in judgment(s):

AGA Assistance Australia Pty Ltd v Tokody [2012] QSC 176
Allison & Anor v BDO (NSW-Vic) Pty Ltd [2010] VSC 35
Amoco Australia Pty Ltd v Rocca Bros Motor Engineering Co Pty Ltd [1973] HCA 40; (1973) 133 CLR 288
Attwood v Lamont [1920] 3 KB 571
Ausdale Enterprises Pty Ltd As Trustee for The Lovett Family Trust (ACN 060 607 650) & Anor v Sandford [2006] WASCA 191
BDO Group Investments (NSW-Vic) Pty Ltd v Ngo [2010] VSC 206
Bing! Software Pty Ltd v Bing Technologies Pty Limited (No 1) [2008] FCA 1760
Brightman vLamson Paragon Ltd [1914] HCA 90; (1914) 18 CLR 331
Buckley v Tutty [1971] HCA 71; (1971) 125 CLR 353
Burke v Corruption and Crime Commission [2012] WASCA 49
Business Seating (Renovations) Ltd v Broad [1989] ICR 729
Cash Orders (Amalgamated) Ltd v Haynes (1937) 37 SR (NSW) 157
Community First Credit Union Ltd v Khan (unreported, Supreme Court of New South Wales, 30 August 1995)
Davies v Davies (1887) 36 Ch D 359
Dawnay Day & Co Ltd v D'Alphen [1998] ICR 1068
Dyer's case (1414) 2 Hen V, f 5
Elsley v J.G. Collins Insurance Agencies Limited [1978] 2 SCR 916
Emeco International Pty Ltd v O'Shea [2012] WASC 282
Fitch v Dewes [1921] 2 AC 158
G W Plowman & Son Ltd v Ash [1964] 1 WLR 568
Harris/D-E Pty Limited v McClellands Coffee & Tea Pty Ltd [1999] NSWSC 128
Herbert Morris, Limited v Saxelby [1916] 1 AC 688
IceTV Pty Ltd v Ross [2009] NSWSC 980
IF Asia Pacific Pty Ltd v Galbally [2003] VSC 192
Integrated Group Limited v Dillon [2009] VSC 361
J W Chafer Ltd v Lilley [1947] LJR 231
Jardin and Jardim Investments Pty Ltd v Metcash Ltd [2011] NSWCA 409
John Fairfax Publications Pty Ltd v Birt [2006] NSWSC 995
Kerchiss v Colora Printing Inks Ltd [1960] RPC 235
Koops Martin v Dean Reeves [2006] NSWSC 449
Landmark Underwriting Agency Pty Ltd v Kilborn [2006] NSWSC 1108
Lindner v Murdock's Garage [1950] HCA 48; (1950) 83 CLR 628
Littlewoods Organisation Ltd v Harris [1977] 1 WLR 1472
Maggbury Pty Ltd v Hafele Aust Pty Ltd [2001] HCA 70; 210 CLR 181
Maitland Main Collieries Pty Ltd v Hunter Valley Coal Corporation [2006] NSWCA 258
Marchon Products Ltd v Thornes [1954] 71 RPC 445
Mason v Provident Clothing & Supply Co Ltd [1913] AC 724
McPherson v Moiler (1920) 20 SR (NSW) 535
Miles v Genesys Wealth Advisers Limited [2009] NSWCA 25
Mitchel v Reynolds (1711) 1 P Wms 181; [1558‑1774] All ER Rep 26
N E Perry Pty Ltd v Judge [2002] SASC 312
N P Generations Pty Ltd v Feneley [2001] 80 SASR
Nomad Modular Building Pty Ltd v Smith [2007] WASC 117
Noone v Mericka & Ors (No 2) [2012] VSC 2
Nordenfelt v The Maxim Nordenfelt Guns and Ammunition Co Ltd [1894] AC 535
NUS International Pty Ltd v Edwards (1981) IPR 599
Otis Elevator Co Pty Ltd v Nolan [2007] NSWSC 593
Park v Brothers [2005] HCA 73; 80 ALJR 317
Pearson v HRX Holdings Pty Ltd [2012] FCA 161
Pearson v HRX Holdings Pty Ltd [2012] FCAFC 111
Perls v Saalfelf [1892] 2 Ch 149
Pisano v Health Solutions (WA) Pty Ltd [2012] WASC 84
Printers & Finishers Ltd v Holloway [1965] 1 WLR 1
Printing & Numerical Registering Company v Sampson (1875) LR 19 Eq 462
Putsman v Taylor [1927] 1 KB 637
Ringrow Pty Ltd v BP Australia Pty Ltd [2005] HCA 71; (2005) 224 CLR 656
Ross v IceTV Pty Ltd [2010] NSWCA 272
Russ Australia v Benny [2006] NSWSC 1118
SBJ Stephenson Ltd v Keith Anthony Mandy [2000] FSR 286
Smith v Nomad Modular Building Pty Ltd [2007] WASCA 169
Sonnet Corp Pty Ltd v Wilson [2008] NSWSC 579
Stacks Taree v Marshall (No 2) [2010] NSWSC 77
Technograph Printed Circuits Ltd v Chalwyn Ltd [1967] FSR 307
Tobacco Institute of Australia Ltd v Australian Federation of Consumer Organisations Inc (1992) 38 FCR 1
Under Water Welders & Repairers Ltd v Street and Longthorne [1968] RPC 498
Williams v Fawcett [1986] QB 604
Winkle & Co Ltd v Gent & Son [1914] 31 RPC 473

TABLE OF CONTENTS

Introduction
The structure of these reasons
The facts and background

Emeco's business
Mr O'Shea's position and his responsibility at Emeco
The facts and issues in dispute
The witnesses for Emeco
Mr O'Shea's evidence

The injunction sought and the approach to be taken
The restraint of trade clause
Legal principles concerning restraint of trade

Principles generally concerning restraint of trade clauses
The 'without prior written consent' qualification to the restraints

The enforceability of the Competitor Restraint

The interests which can support a competitor restraint
Did Emeco have an interest in protecting confidential information?

Precise identification of the confidential information is not necessary
The expected confidential information

The extent of Emeco's expected customer connection interest
Is the Competitor Restraint limited to the protection of Emeco's interests?

The enforceability of the Non-Solicitation Restraint and Client Restraints

Severance

Should discretion be exercised to grant an injunction?
The terms of the injunction which should be granted

Conclusion

EDELMAN J:

Introduction

A mantra of the will theorists in 19th century classical period of English contract law was pacta sunt servanda (promises must be kept). The enforcement of contracts preserved the liberty of individuals to structure their affairs.[1] But, the liberty to contract has numerous limits. Centuries before the rise of freedom of contract one limit developed when judges treated as void some clauses in bonds or agreements which were in restraint of trade. This doctrine persisted through the 19th century and remains today as a requirement to balance the liberty to contract with the liberty to trade.
[1] Printing & Numerical Registering Company v Sampson (1875) LR 19 Eq 462, 465 (Jessel MR) discussed Pisano v Health Solutions (WA) Pty Ltd [2012] WASC 84 [59] (Pritchard J).
The foundation of the restraint of trade doctrine was probably a sketchy report of a case in 1414 suggesting that restraints upon trade can be void. Hull J considered the enforcement of a six‑month restraint upon the defendant practising trade of dyer in a town. He said that the defendant might have demurred, exclaiming that 'By God, if the plaintiff were here he should go to prison until he paid a fine to the King'.[2] The doctrine later flourished following a powerful and learned opinion of the highly respected Parker CJ (a decade before his fall from grace when Lord Chancellor)[3] set against a background of conflict arising from the influence of the guilds and royal monopolies in Tudor and Stuart England.[4]
[2] 'per Dieu si le plaintiff fuit icy il irra al prison, tanque il ust fait fine au Roye': Dyer's case (1414) 2 Hen V, f 5, pl 26. Quoted in Mitchel v Reynolds (1711) 1 P Wms 181, 193 ‑ 194; [1558‑1774] All ER Rep 26, 31-32 with approval of 'the indignation... although not his manner'.
[3] Mitchel v Reynolds (1711) 1 P Wms 181, 193-194; [1558-1774] All ER Rep 26.
[4] J D Heydon The Restraint of Trade Doctrine (3rd ed, 2008) 3-7.
After a 'Homeric battle',[5] at base concerned with the conflict between freedom of contract and freedom of trade, the modern law in relation to restraints of trade began with the speech of Lord Macnaghten in Nordenfelt v The Maxim Nordenfelt Guns and Ammunition Co Ltd.[6]Although doubts have been expressed about the place of the doctrine in modern law,[7] it is established that a contracting party can generally only restrain another's liberty to trade if the restraint protects legitimate interests of the covenantee, and the clause is not wider than is reasonably necessary to protect those interests.[8]
[5] Attwood v Lamont [1920] 3 KB 571, 585 (Younger LJ).
[6] Nordenfelt v The Maxim Nordenfelt Guns and Ammunition Co Ltd [1894] AC 535, 565. This observation was made by Robert Walker J (as his Lordship was then) in Dawnay Day & Co Ltd v D'Alphen [1998] ICR 1068, 1075.
[7] Maggbury Pty Ltd v Hafele Aust Pty Ltd [2001] HCA 70; 210 CLR 181, 214 - 216 [91] - [95] (Callinan J).
[8] Ringrow Pty Ltd v BP Australia Pty Ltd [2005] HCA 71; (2005) 224 CLR 656, 667 [27] (the Court).
The balancing exercise involved in restraint of trade cases is one of evaluative judgment having regard to the terms of the covenant and the facts of the case.[9] Although detailed evidence was led in this case, and substantial submissions were made about numerous propositions of law which I consider below, this trial ultimately involved the exercise of this evaluative judgment.
[9] Ausdale Enterprises Pty Ltd As Trustee for The Lovett Family Trust (ACN 060 607 650) & Anor v Sandford [2006] WASCA 191 [12] (McLure JA).
Mr O'Shea was one of a small number of business development managers at Emeco International Pty Ltd (Emeco) who were described as the 'face of the company' to Emeco's customers and potential customers. He was one of the senior employees of Emeco and was remunerated as such. He built up close relationships with important clients of Emeco in the highly competitive dry hire industry. And he was trusted with confidential information which could be damaging to Emeco in the hands of a competitor.
After about one year and nine months working for Emeco, Mr O'Shea resigned from Emeco and sought immediately to start work for one of Emeco's major competitors, National Plant and Equipment (NPE). Emeco sought an injunction to enforce restraints in Mr O'Shea's contract of employment. The injunction was to prevent Mr O'Shea from various activities, including preventing Mr O'Shea from starting employment with NPE for six months.
On 8 August 2012, I granted an interlocutory injunction restraining Mr O'Shea from accepting employment with NPE. My decision in the interlocutory matter was given soon after the hearing and trial dates were expedited so that the matter could be heard within 3 to 4 weeks. A reason for the need for an urgent trial was statements in Mr O'Shea's sworn affidavit evidence concerning his severe financial hardship arising from unemployment. As I explain below, those statements (or, more accurately, intentional omissions from those statements) were an example of aspects of Mr O'Shea's sworn evidence which can, at best, be described as misleading.
The trial involved detailed evidence and cross-examination and a searching analysis of the restraint provisions in Mr O'Shea's employment contract with Emeco. There was significant dispute about a number of facts as well as some central propositions of law. One legal issue raised at the hearing, which appears to be novel in Australia, concerns the effect of a provision for a release from the restraint clause with the consent of the employer which consent, by implication, must not be unreasonably withheld. It appears from the cases that these clauses are now reasonably common. But the research of counsel for the defendant and my research suggests that their effect has not been considered judicially in Australia, although there are conflicting English decisions.
Ultimately, Emeco did not make any submissions concerning this consent provision. Although there are reasonable arguments that it might provide limited support for the enforceability of the restraints relied upon by Emeco, in this case the clause does not affect the conclusions I would otherwise reach, so it is not necessary to express a concluded view on the issue.
My conclusion is that the restraint which I have described in these reasons as the Competition Restraint, preventing Mr O'Shea from performing work for NPE, is enforceable. Other restraints upon which Emeco relied are not enforceable. I consider that it is appropriate that an injunction be granted.

The structure of these reasons

After discussion of the facts and background in the sections below, the consideration of the main issues is structured as follows:
·The restraint of trade clause [65]
·Legal principles concerning restraint of trade clauses generally [66] ‑ [70]
·Construction of a 'without prior consent' qualification [71] ‑ [83]
·The interests which can support a competitor restraint [84] ‑ [95]
·Whether precise identification of confidential information is necessary [95] ‑ [108]
·Emeco's expected confidential information [109] ‑ [154]
·The extent of Emeco's expected customer connection [155] ‑ [161]
·Whether the Competitor Restraint was reasonable in light of Emeco's interests [162] ‑ [182]
·The enforceability of the Non-Solicitation and Client Restraints [183] ‑ [213]
·Whether parts of the Non-Solicitation and Client Restraints can be severed [214] ‑ [220]
·Whether discretion should be exercised to grant an injunction [221] ‑ [255]

The facts and background

Emeco's business

The trial proceeded in part by a document in which the parties set out those facts which were agreed and those facts and issues which were in dispute. The plaintiff, Emeco International Pty Ltd (Emeco), read three affidavits from Mr Stubbs (state manager of Emeco in Western Australia and South Australia),[10] two affidavits from Mr Milne (national marketing manager of Emeco),[11] and two affidavits of Mr Halls (general manager of Australian Rental at Emeco).[12] Mr O'Shea read one affidavit which he swore for trial.[13]
[10] Exhibits C, C1 and C2.
[11] Exhibits D and D1.
[12] Exhibits B and B1.
[13] Exhibit A.
Emeco is a company that carries on the business of dry hiring mobile mining equipment in Australia and internationally. The business of dry hire involves hiring only the equipment, not the operators. Within the dry hire industry approximately 40% of Emeco's revenue comes from customers of Emeco have contracts for their equipment to be maintained. For those customers Emeco sends employees or contractors to the sites of its clients mainly to maintain equipment. The other 60% comes from non-maintained dry hire rental contracts.[14] Emeco typically removes the equipment from the client's site at the end of the hire period.
[14] Exhibit D (Affidavit of Mr Milne) [6]-[9].
The dry hire market in Western Australia and South Australia focuses upon a small number of companies in which mining is concentrated. Mr Stubbs described 13 of these companies as follows:[15]
(a)Iron ore: BHP Billiton Iron Ore Pty Ltd; Rio Tinto Limited; Fortescue Metals Group Ltd.
(b)Gold: Newcrest Mining Limited; Alacer Gold Corp; Saracen Mineral Holdings Limited; Newmont Mining Corporation; Navigator Resources Limited.
(c)Contractors: Downer EDI Limited; Macmahon Holdings Ltd; BGC Australia Pty Ltd; NRW Holdings Limited.
(d)Coal: The Griffin Coal Mining Company Pty Ltd.
[15] Exhibit C (affidavit of Mr Stubbs) [13].
Mr O'Shea was employed by Emeco for 21 months, between 21 October 2010 and 3 August 2012. He was employed by Emeco under two consecutive contracts of employment. The first was dated 21 October 2010. The second was dated 3 October 2011. Both contracts contained the same restraint of trade clauses. The relevant clauses are those contained in the second employment contract.
On 15 July 2012, Mr O'Shea entered into a contract of employment with NPE. Mr O'Shea then gave notice of his resignation from Emeco on 16 July 2012.
Mr O'Shea alleged that at the time of his resignation he was told by Mr Stubbs not to worry about restrictive clauses because Emeco could not stop him from working for anyone else. Mr O'Shea also said that he was told that as long as he protected Emeco's intellectual property, confidential information and clients there should be no problem.[16] This was denied by Mr Stubbs.[17] For reasons explained below, in relation to Mr O'Shea's credit generally, I prefer the evidence of Mr Stubbs.
[16] Exhibit A (affidavit of Mr O'Shea) [65].
[17] Exhibit C (affidavit of Mr Stubbs) [54] - [70] and Statement of Agreed Facts and Facts and Issues in Contention [38].
NPE and Emeco compete for contracts for the dry hire of heavy earthmoving equipment in Western Australia. NPE has, on occasions in the past, been the successful tenderer ahead of Emeco for contracts for the dry hire of heavy earthmoving equipment. Although Mr O'Shea attempted to minimise the extent to which NPE and Emeco were in competition, for the reasons I explain below I do not consider that his evidence was reliable.
Mr Stubbs explained,[18] and I accept, that the following comparisons can be made between Emeco and NPE: the size of their equipment in their fleets is similar, the quantity of their equipment is similar, and the locations in which they offer services and the services they offer are similar. A presentation which Mr Stubbs made to the Executive Leadership Team at Emeco described NPE as one of Emeco's top four competitors.[19]

Mr O'Shea's position and his responsibility at Emeco

[18] Exhibit C1 (affidavit of Mr Stubbs) [7].

[19] Exhibit C1 (affidavit of Mr Stubbs) [7].

Mr O'Shea was employed by Emeco in the position of business development manager. He was responsible for Western Australia and South Australia.[20] He reported to Mr Stubbs, the state manager for Western Australia and South Australia.[21] His employment contract provided that his primary place of work was in Western Australia but that[22]
Emeco operates in many different locations within Australia. Accordingly, you may be required to travel to and work at different locations to meet business needs from time to time, which may include travel overseas or interstate for temporary periods. You agree to work at such different locations if you are asked to do so.
[20] Exhibit C (affidavit of Mr Stubbs) GRS-2.
[21] Exhibit C (affidavit of Mr Stubbs) GRS-2, Schedule 1.
[22] Exhibit C (affidavit of Mr Stubbs) GRS-2.
Across Australia, Emeco has a workforce of around 410 people.[23] A core part of Emeco's business is in Western Australia.[24] Emeco has around 100 employees in Western Australia and a further 50 contractors.[25] More than a third of Emeco's equipment is based in Western Australia.[26]
[23] Exhibit B (affidavit of Mr Halls) [24].
[24] Exhibit C (affidavit of Mr Stubbs) [4].
[25] ts 95 (Mr Stubbs).
[26] ts 75 (Mr Halls).
The major competitors of Emeco dry hire their equipment to customers in Western Australia and South Australia. This creates extremely strong competition in a market where there is a relatively large number of dry hirers for a relatively small number of customers.[27]
[27] Exhibit C (affidavit of Mr Stubbs) [16] - [18].
Of the 410 members of Emeco's Australian workforce, only 21 employees occupy senior positions in which their employment contracts contain restraint clauses. Those people are the general manager, state manager, equipment salesmen, business development managers, and state maintenance managers.[28] The business development managers are the 'face of the company to [Emeco's] customers' and to its 'potential customers'.[29]
[28] Exhibit B (affidavit of Mr Halls) [24].
[29] ts 132 (Mr Stubbs).

Mr O'Shea's employment contract provided for a substantial salary (well in excess of $100,000), a lump sum bonus upon commencement of employment, and performance shares bonus as part of a Long Term Incentive program.[30]
[30] Exhibit C (affidavit of Mr Stubbs) GRS2, Schedule 1.
As a business development manager at Emeco, Mr O'Shea also had an expense account. He hosted functions for Emeco's clients such as a cricket day in February 2012 at which 10 senior representatives of Emeco's customers were present.[31]
[31] Exhibit C (affidavit of Mr Stubbs) [42].
It was an agreed fact that during his employment with Emeco, Mr O'Shea was, amongst other things, the principal point of contact for the dry hire by Emeco of heavy earthmoving equipment for the following five customers of Emeco:[32]
•Alacer Gold South Kalgoorlie Operations;
•Saracen Gold Carosue Dam Operations;
•Navigator Resources Bronzewing Operations;
•Newcrest Telfer Operations; and
•Barrick Gold MoonBeam Operations.
[32] Statement of Agreed Facts [8].
As a business development manager, Mr O'Shea was also given full access to all of Emeco's information concerning Emeco's existing contracts and information about Emeco's potential new business.[33] He was aware of upcoming opportunities, and the status of those opportunities, which were matters discussed at the meetings of the business development managers.[34]
[33] ts 46 (Mr O'Shea).
[34] ts 46 (Mr O'Shea).
The business development managers met on a weekly basis.[35] They also had daily discussions about clients, contracts or movements in the market.[36] Clients were allocated a particular business development manager who maintained regular contact with the client and ensured that the client's needs were met.[37] There was an expectation that a high degree of trust would develop between the business development manager and a client and that this trust would be used to develop long‑lasting relationships which are important to retain current clients and obtaining new rental contracts.[38]
[35] ts 140 (Mr Milne).
[36] ts 140 (Mr Milne); Exhibit D (affidavit of Mr Milne) [63].
[37] Exhibit D (affidavit of Mr Milne) [54], [60].
[38] Exhibit D (affidavit of Mr Milne) [49], [51].
Mr Milne also explained that one of the two main roles of a business development manager is to retain and maintain current client contacts and interact with those clients on a regular basis regarding their current rental contracts and future equipment needs.[39] The other main role is that a business development manager is required to identify new business opportunities by:[40]
a)researching and identifying business opportunities with new, or existing, clients;
b)identifying the correct person within that client with whom to make contact;
c)arranging and attending meetings with that client contact;
d)identifying the client's immediate and long term equipment needs; and
e)building an ongoing relationship with that client.
[39] Exhibit D (affidavit of Mr Milne) [41].
[40] Exhibit D (affidavit of Mr Milne) [42].
There were never more than four business development managers in Western Australia. When Mr O'Shea commenced employment with Emeco on 21 December 2010 there were three other business development managers: Messrs Milne, Aslander and Bishop.[41] Mr O'Shea and the other business development managers worked as a team.[42] Mr Bishop and Mr Aslander finished as business development managers two months later and a further four months later respectively.[43]
[41] Exhibit C (affidavit of Mr Stubbs) [35].
[42] Exhibit C (affidavit of Mr Stubbs) [36].
[43] Exhibit C (affidavit of Mr Stubbs) [35] - [36].
After Mr Aslander left in March 2011, Mr O'Shea worked closely with the only other business development manager, Mr Milne, and also with Mr Matijevic who was appointed soon afterwards. When Mr O'Shea worked with Mr Milne duties were not allocated to them separately; they both worked with all of Emeco's customers and they both worked on all the opportunities being pursued by Emeco.[44]
[44] Exhibit C (affidavit of Mr Stubbs) [37] - [38].
From May 2012 until his resignation, Mr O'Shea was the sole business development manager for Western Australia at Emeco. He had the sole responsibility for all of Emeco's clients other than Alacer Gold South Kalgoorlie Operations.[45] Emeco has around 20 corporate clients.[46]
[45] Exhibit C (affidavit of Mr Stubbs) [44].
[46] ts 141 (Mr Milne).
Mr O'Shea also worked with the state manager of Emeco in Western Australia. Although the task of conducting discussions with potential clients was the role of a business development manager, Mr Stubbs would occasionally join those discussions.[47] Mr Stubbs also explained that he spoke with Mr O'Shea on a daily basis on the telephone and in person.[48] Mr O'Shea's office was on the same floor as Mr Stubbs. And Mr Stubbs travelled to Kalgoorlie with Mr O'Shea on a number of occasions. Mr Stubbs said, and I accept, that about 40% of Mr O'Shea's time was spent on business development opportunities.[49]
[47] ts 128 (Mr Stubbs).
[48] ts 129 (Mr Stubbs).
[49] ts 130 (Mr Stubbs).
In the course of his employment with Emeco as a business development manager, Mr O'Shea had access to, and utilised, Emeco's information, including the following:[50] the termination provisions in Emeco's contracts with customers; the date on which those contracts end; the pricing terms and conditions around pricing in those contracts; Emeco's fleet configuration; Emeco's performance around a particular site or contract; the identity of the decision makers in Emeco's clients and their drivers for decision making. Mr O'Shea also had access to information about Emeco's upcoming opportunities and the status of those opportunities.[51]
[50] Exhibit B (affidavit of Mr Halls) [18].
[51] Exhibit B (affidavit of Mr Halls) [20].
Measures were taken by Emeco to prevent access to much of the information above to general employees. These restrictive measures did not apply to the 21 employees who had signed contracts with restraint of trade clauses.[52]

The facts and issues in dispute

[52] Exhibit B (affidavit of Mr Halls) [25] - [26].

This trial was expedited. I explained to the parties at a directions hearing prior to the trial that two days had been allocated for hearing all the evidence and submissions and that the trial should not be adjourned part heard. The short period of time for hearing was divided between the parties. Prior to trial the parties produced a document which summarised and narrowed the facts and issues which were in contention.
Although I have already set out many of my findings of fact, it is necessary to recite the facts and issues which it was agreed before trial were in contention. The reason for this is that counsel for Mr O'Shea, in detailed written submissions,[53] placed reliance in numerous respects upon matters which were described as Mr O'Shea's uncontested affidavit evidence.[54]
[53] Defendant's further final submissions.
[54] Defendant's further final submissions, schedule A.
As I explain below, I am not prepared to accept Mr O'Shea's evidence on any contested matter. I do not consider that it is necessary for many of these matters to have been specifically put to Mr O'Shea in cross‑examination in the circumstances of this case.[55] The circumstances are that: (i) facts and issues had been agreed by the parties prior to the trial to be in contest; (ii) affidavits had been filed contradicting Mr O'Shea's accounts of various facts; (iii) Mr O'Shea's credibility was clearly in issue as was apparent from both the cross‑examination of Mr O'Shea, and the emphasis in the statement of facts in issue on matters such as Mr O'Shea's indemnity in his NPE employment contract; and (iv) a short period had been allocated for an expedited trial, and the parties had limited time for cross-examination.
[55] Burke v Corruption and Crime Commission [2012] WASCA 49 [180] - [187], [192] - [193] (Mazza JA).
To summarise from the agreed document filed before trial, the matters in contest included:
(1)As to confidential information:
(a)the extent of confidential information to which Mr O'Shea was exposed and his ability to recall that confidential information.
(b)Whether Mr O'Shea had access to information about Emeco's entire customer list and was accountable for all those customers as part of the business development manager team.
(c)The ability of Mr O'Shea to use his knowledge about how Emeco's pricing model works.
(d)The period for which Emeco's confidential information remains confidential.
(e)The public availability of Emeco's confidential information such as Earnings Before Income Tax (EBIT) or Return on Funds Employed (ROFE).
(2)As to customer connection:
(a)Whether Mr O'Shea has been in a position to form relationships with customers other than his five principal customers.
(b)Whether Mr O'Shea's role is as a business development manager or whether, in reality, it is more accurately described as an 'account management' role.
(c)The relevance of the relationship between a business development manager and a client. In particular, whether that relationship is a relevant factor or whether the factors are confined to the availability of equipment and price.
(d)Whether the relationships between Emeco and its clients are long term relationships which are not fragile, and the strength of the relationships developed between Mr O'Shea and any person within a client company.
(e)Whether Mr O'Shea was one of a team of two to four business development managers who worked together as a team.
(f)Whether Mr O'Shea had any established customer connections with Emeco's clients prior to commencing employment with Emeco and whether Mr O'Shea developed customer connections with any customers other than the five for whom he was principally responsible at Emeco.
(g)Whether 95% of Mr O'Shea's entertainment expenses were on entertainment concerning three of the customers for whom he was principally responsible: Alacer, Saracen and Navigator.

The witnesses for Emeco

The evidence of Mr O'Shea, for reasons I explain below, was not reliable. In contrast, I have no hesitation in accepting the evidence of each of the witnesses for Emeco. Their evidence was fairly and honestly given and each of them gave frank answers to questions, even when the answer did not assist Emeco's case.
Emeco called three witnesses. One witness was Mr Stubbs, the state manager of Emeco in Western Australia and South Australia, to whom Mr O'Shea reported. Another was Mr Halls, who is the general manager for the whole rental division for Emeco in Australia. The third was Mr Milne who, as I have explained, was a business development manager and is now Emeco's national marketing manager.

Mr O'Shea's evidence

Mr O'Shea was the only witness to give evidence in support of his defence. Mr O'Shea's employment with Emeco ended on Friday 3 August 2012. He has had no income since. At the interlocutory hearing he gave affidavit evidence of his debts and need to provide for his family. He was understandably extremely motivated to commence employment with NPE.
However, Mr O'Shea's understandable enthusiasm and devotion to work for his new employer manifested itself in evidence which I find to be unreliable. His answers were often evasive and I formed the impression in his evidence that he would tailor his answers to assist his case.
On a number of occasions Mr O'Shea's evidence was, at best, misleading. Mr Neil, senior counsel for Mr O'Shea, properly did not attempt to condone or justify Mr O'Shea's conduct which misled the court, including affidavit evidence from Mr O'Shea at the interlocutory injunction hearing. There is nothing to suggest that any responsibility for intentional omissions should be borne by the solicitors or by senior counsel who represented Mr O'Shea at the interlocutory injunction hearing (different counsel represented Mr O'Shea at the trial). Mr O'Shea's evidence, again and again, was that he did not reveal the information to the court because he did not consider it to be relevant.
Five examples can be given supporting why I do not accept Mr O'Shea's evidence on any contentious matter. Other examples will be given elsewhere in these reasons.
First, prior to the hearing for an interlocutory injunction in this matter, Mr O'Shea swore an affidavit saying that he had not commenced work for NPE and had not signed a 'letter of appointment'.[56] Mr O'Shea had signed a contract of employment with NPE. But he did not mention this. Although he thought that it was relevant to tell the court in his affidavit that he had not started work for NPE and that he had not signed a letter of appointment, he said that 'it wasn't relevant' for the court to know that he had signed a contract of employment.[57] I do not accept this explanation. Mr O'Shea must have been aware that the court would be misled by his affidavit evidence.
[56] ts 19 (Mr O'Shea).
[57] ts 19 (Mr O'Shea).
Secondly, also in his affidavit provided for the hearing of the interlocutory injunction, Mr O'Shea said that without any employment he had no source of income and that he and his family would be placed under significant financial hardship. He did not mention that the contract that he had signed with NPE contained an indemnity. The indemnity provided:[58]
The Company will indemnify the Employee against any action (and any subsequent costs) by the Employee's immediate previous employer as a direct result of an alleged breach of the Employee's restraint period agreement with that employer. In the event the Employee is legally restrained from actively fulfilling the duties of the role with the Company, the Company, at its absolute discretion, will either find suitable alternative duties or pay the Employee all remuneration due under the agreement up to a maximum of six months and direct the Employee not to actively participate in the operations of the Company.
[58] Exhibit 14.
Mr O'Shea knew that the purpose of the indemnity was to protect him from financial hardship if he were restrained by injunction from working for NPE.[59] He had requested the indemnity from NPE.[60] He was aware that financial hardship is one of the factors this court takes into consideration in deciding whether or not to grant an interlocutory injunction.[61] He had read his lawyers' submissions which referred to the severe financial hardship he would suffer if he were unable to commence employment with NPE.[62] But he said that he did not believe that it was relevant to disclose the indemnity to the court because the hearing was interlocutory.[63] I do not accept this explanation.
[59] ts 18 (Mr O'Shea).
[60] ts 17 (Mr O'Shea).
[61] ts 19 (Mr O'Shea).
[62] ts 19 (Mr O'Shea).
[63] ts 20 (Mr O'Shea).
Thirdly, Mr O'Shea's evidence concerning his role at Emeco was constantly shifting. He swore in his affidavit that because of the nature of his role in relation to five clients for whom he was the primary point of contact, he considered that his role was primarily account management rather than business development.[64] When it was put to Mr O'Shea in cross‑examination that this was inconsistent with his job description, Mr O'Shea insisted that he was told at his employment interview with Emeco that his role would be mainly ('a majority of') account management. Mr O'Shea had not included in his affidavit this matter about which he had allegedly been told at his employment interview. This was another matter that Mr O'Shea said that he did not think to be 'relevant' to include in his affidavit.[65]
[64] Exhibit A (affidavit of Mr O'Shea) [33].
[65] ts 23 (Mr O'Shea).
Mr O'Shea was taken to a job description of his role at Emeco which contradicted his assertion that he was involved in account management rather than business development. That description is set out below at [146] and [158] but it suffices to say that he is expressly described as a business development manager.[66]
[66] Exhibit C (affidavit of Mr Stubbs) GRS-1.
Mr O'Shea's first response to this in cross‑examination was to say that the job description was from June 2011 and that he could not recall whether this was the same description given to him at the time he first commenced with Emeco.[67] When he was confronted by his own sworn evidence that this was a copy of his first employment contract then he eventually accepted his own evidence.[68]
[67] ts 24 (Mr O'Shea).
[68] ts 24 (Mr O'Shea).
Mr O'Shea's second response was to suggest that '[b]usiness development - relationship management is also account management'.[69] As I have explained, only minutes earlier he had reiterated his sworn evidence that his role was primarily account management rather than business development.
[69] ts 24 (Mr O'Shea).
I consider that the most accurate statement of Mr O'Shea's job description is the June 2011 description, which he conceded matched the description at the start of his employment. The description is consistent with the evidence of Mr Milne who could recall telling Mr O'Shea in late 2010 that 'this is one part of your role, which is account management of these projects and clients, alongside ... the other duties of a business development manager.'[70]
[70] ts 151 (Mr Milne).
Fourthly, there were matters in Mr O'Shea's curriculum vitae which he accepted were accurate, but which contradicted his evidence. The curriculum vitae had been prepared by Mr O'Shea a year ago. But he sent it to NPE in July 2012.[71]
[71] ts 28-29 (Mr O'Shea).
One contradiction related (again) to Mr O'Shea's evidence that his role was an 'account manager' rather than a business development manager. However, in his curriculum vitae, Mr O'Shea described his role as 'winning new business for Emeco and maintaining existing business and relationships'.[72] Another example was that he said in his curriculum vitae that he was 'personally responsible for the commercial project management of maintain[ed] sites throughout the Goldfields and Pilbara regions in Western Australia'.[73] But, until confronted with this, in his evidence he had said that his five clients were all in the goldfields and had given the impression that he did not have any involvement with clients in the Pilbara.[74]
[72] ts 26 (Mr O'Shea).
[73] ts 26 (Mr O'Shea).
[74] ts 22 (Mr O'Shea).
Another contradiction was that Mr O'Shea described in his curriculum vitae a 'client base in iron ore, gold and coal, mining houses tier 1 contractors currently reporting to the executive general manager of Australia'. In his evidence Mr O'Shea suggested that this reference to 'client base' was to Emeco's client base and that he had not meant to suggest that his own client base went beyond gold companies.[75] I do not accept that this was what he meant to suggest.
[75] ts 27-28 (Mr O'Shea).
Fifthly, in the course of cross‑examination by Mr O'Shea's counsel, it was put to Mr Stubbs that the reason why Mr O'Shea signed a contract between Emeco and Abigroup Contractors Pty Limited was because Mr Matijevic was away in the Pilbara on a site visit and Mr Matijevic had asked Mr O'Shea to sign the contract for him.[76] Mr Stubbs accepted that Mr O'Shea had said this in his affidavit, but Mr Stubbs could not recall if that had happened or not.[77] A clean copy of the signature page was produced. This was the page about which it was asserted that Mr O'Shea signed only because Mr Matijevic was away in the Pilbara. After seeing the clean copy of the signature page counsel properly accepted that the allegedly absent Mr Matijevic had signed as a witness present to Mr O'Shea's signature.[78]
[76] Exhibit A (affidavit of Mr O'Shea) [134(h)]; ts 110 (counsel).
[77] ts 110 (Mr Stubbs).
[78] Exhibit C (affidavit of Mr Stubbs) GRS-3; ts 110.

Due to the view I formed of Mr O'Shea's evidence based on these reasons and upon his demeanour, I am not prepared to accept his evidence on any contentious matter.
In contrast, I found the evidence of each of the witnesses for Emeco to be honest and reliable. Each of Mr Stubbs, Mr Halls and Mr Milne gave the clear impression of a desire to answer questions as accurately as possible, whether or not the answer assisted Emeco's case. In some instances their answers did not assist Emeco's case, but they were honestly and reliably given.

The injunction sought and the approach to be taken

Emeco seeks a permanent injunction against Mr O'Shea, restraining him until close of business on 3 February 2013, from (either directly or indirectly):
a)accepting employment with or providing or taking part in the provision of consultancy services or otherwise performing work for or providing any products of services to NPE or any dry hire company which competes with the business of the plaintiff;
b)canvassing, soliciting or enticing away (or attempting to canvass, solicit or entice away) the business of any of the plaintiff's existing clients;
c)performing work for, or providing products or services to , any of the plaintiff's existing clients (except for where the dealings do not, or work does not involve or relate to the products or services provided by the plaintiff).
Emeco's indorsement of claim also seeks damages resulting from Mr O'Shea's actual and/or threatened employment with NPE and disclosure of confidential information to NPE in breach of the express and implied terms of his contract of employment.[79] No submissions were made in relation to this issue. There was no evidence of any loss suffered by Emeco as a result of Mr O'Shea's employment contract with NPE. Nor was there any evidence that he had disclosed any confidential information.
[79] Plaintiff's indorsement of claim [1(b)].
At the commencement of oral submissions, counsel accepted that the issues in this case should be structured in the following way:
(1)Are any or all of the restraint clauses enforceable? This issue is to be assessed, and decided, at the date of contract.
(2)If any or all of the restraint clauses are enforceable, would they be infringed if Mr O'Shea were employed with NPE on the terms of his employment contract with NPE?
(3)Should discretion be exercised to refuse an injunction to restrain any potential infringement? This requires relevant circumstances to be assessed at the date of trial.
Mr Neil, senior counsel for Mr O'Shea, properly conceded that Mr O'Shea's conduct in entering into a contract of employment with NPE fell within the scope of each of the three restraints in this case.[80] The only issues between the parties were (1) and (3).
[80] ts 153.

The restraint of trade clause

Mr O'Shea's October 2011 employment contract[81] contains the following restraint provisions. Adopting the language used by the parties in submissions, I have added a description in bold of each of the four relevant restraints.
[81] Exhibit C (affidavit of Mr Stubbs) GRS -2.
Confidential Information
In this clause regarding confidential information the following terms have the following meanings.
…
Termination Date” means the date of termination of your employment with Emeco for any reason. You acknowledge and agree to respect the confidentiality of information and documents to which you have access in the course of or arising from your employment.
…
Restraints
You understand and acknowledge that:
a.you occupy a responsible position with Emeco;
b.Emeco's relationship with its Clients are critical to the business;
c.it is in Emeco's legitimate business interests to promote the preservation of its relationship with its Clients;
d.it is in Emeco's legitimate business interests to protect the use by you or other of Confidential Information to its detriment;
e.the restraints in this clause are reasonable and necessary to protect the legitimate business interests of Emeco in the preservation of its client relations the good will of its business and its Confidential Information.
You agree not to engage (either directly or indirectly) in each or any of the activities specified in sub-clause (a)(1) - (4), within the areas and for the periods after the Termination Date as specified in sub-clause (b)(1) , without the prior written consent of Emeco:
a) 1. provide or take part in the provision of consultancy services or otherwise perform work for or provide products or services to a business competitive with the business of Emeco [the Competitor Restraint];
2.canvass, solicit or entice away or attempt to canvass, solicit or entice away the business of any Client [the Non-Solicitation Restraint];
3.perform work for or provide products or services to any Client, except for where the dealings do not, or work does not, involve or relate to the products or services provided by Emeco [the Client Restraint];
4.induce or attempt to induce any Client or any Person who is at the Termination Date an employee, agent, director, officer, partner, consultant, contractor or adviser of Emeco, to terminate or to not renew any contract of any sort which they may have with Emeco or to disclose any information in relation to the business or affairs of Emeco which has been obtained by them through their dealings with Emeco [the Inducement Restraint].
b) 1.In Western Australia for a period of 6 months, unless that period is held invalid for any reason by a court of competent jurisdiction, in which case, 3 months.

Legal principles concerning restraint of trade

Principles generally concerning restraint of trade clauses

The leading statement in this jurisdiction of the principles applicable to the reasonableness of restraint of trade clauses is the decision of the Court of Appeal in Smith v Nomad Modular Building Pty Ltd.[82] In that case, McLure JA (with whom Buss JA agreed) quoted from Lord Macnaghten in Nordenfelt v The Maxim Nordenfelt Guns and Ammunition Co Ltd [83] that for a restraint of trade to be justified:
[I]t is the only justification, if the restriction is reasonable - reasonable, that is, in reference to the interests of the parties concerned and reasonable in reference to the interests of the public, so framed and so guarded as to afford adequate protection to the party in whose favour it is imposed, while at the same time it is in no way injurious to the public.
[82] Smith v Nomad Modular Building Pty Ltd [2007] WASCA 169 [6].
[83] Nordenfelt v The Maxim Nordenfelt Guns and Ammunition Co Ltd [1894] AC 535, 565.
McLure JA explained[84] that a restraint is reasonable in relation to the restraining party if it is necessary for the adequate protection of that party and reasonable in relation to the party restrained if it preserves the fullest liberty of action consistent with that protection.[85]
[84] Smith v Nomad Modular Building Pty Ltd [2007] WASCA 169 [8].
[85] Brightman vLamson Paragon Ltd [1914] HCA 90; (1914) 18 CLR 331, 337 (Isaacs J); Buckley v Tutty [1971] HCA 71; (1971) 125 CLR 353, 376 (the Court).
McLure JA also explained that although the question of reasonableness is determined at the date of the contract, subsequent developments can be considered to determine whether the agreement was reasonable to make at the date of contract, having in mind the best estimate that the parties could make for the future.[86]
[86] Smith v Nomad Modular Building Pty Ltd [2007] WASCA 169 [7]; Amoco Australia Pty Ltd v Rocca Bros Motor Engineering Co Pty Ltd [1973] HCA 40; (1973) 133 CLR 288, 318 (Walsh J); Putsman v Taylor [1927] 1 KB 637, 643 (Salter J).
It is well established, and it was common ground, that the interests which Emeco needed to establish as the justification for the restraints were its customer connections and its confidential information.[87]
[87] Lindner v Murdock's Garage [1950] HCA 48; (1950) 83 CLR 628, 633 - 634 (Latham CJ), 650 (Fullagar J), 654 (Kitto J).
It is also established that a restraint may be justified as protecting more than one legitimate interest. As Meagher JA (Campbell & Young JJA agreeing) explained in Jardin and Jardim Investments Pty Ltd v Metcash Ltd[88] of a restraint in dealing with customers with whom an employee has a close relationship and in circumstances in which the employee has confidential information: 'a restraint on dealing with those customers could be justified as reasonably necessary to protect both interests'.

The 'without prior written consent' qualification to the restraints

[88] Jardin and Jardim Investments Pty Ltd v Metcash Ltd [2011] NSWCA 409 [91].

During the trial I raised with the parties the question of the effect upon the enforceability of the restraint clauses of the opening words 'You agree not to engage … without the prior written consent of Emeco' (emphasis added).
It was common ground that these words included an implication that prior written consent would not be unreasonably withheld. The consent condition upon the restraint clause 'must be construed in the light of the circumstances surrounding the contract, and the purpose the condition was intended to serve'.[89] In written submissions, counsel for Mr O'Shea said, and I accept, that in deciding whether to grant consent Emeco must act reasonably, having regard to its legitimate interests and conformably with the purposes of the contract.[90]
[89] Park v Brothers [2005] HCA 73; 80 ALJR 317, 325 [39] (the court).
[90] Defendant's outline of submissions for final hearing [56].
On one view, the effect of these words in a restraint clause might mean that very few restraint clauses would be invalid. If consent to be released from the restraint cannot be unreasonably withheld, and if 'unreasonable' bears the same meaning as it does in construction of the restraint, then the legal effect of the words is that an employer could only withhold consent in circumstances in which the restraint was necessary to protect the legitimate interests of the employer taking into account the need to preserve the fullest liberty of action of the employee.
In other words, on this approach, in circumstances in which the restraint would otherwise be unenforceable the employer could not withhold consent to the activity.
Although there are Australian cases involving restraint of trade clauses with similar provision for release from restraint with the prior consent of the employer, both my research and that of counsel could find no Australian case in which this issue was considered. However, there is a line of English cases which considers the point.
In J W Chafer Ltd v Lilley,[91] Roxburgh J held that a requirement that consent of the employer be given reasonably could not make enforceable a clause which was otherwise unenforceable. His Lordship considered that it would be reasonable for an employer to withhold consent purely on the grounds that a rival firm was in competition with the employer because 'by the terms of the [employer consent] clause itself the test of reasonableness has to be applied, not to a lawful subject matter, that is to say, protection against misuse of knowledge of customers, but to an unlawful subject matter, namely, direct competition'.[92] This is not a legitimate interest for the purposes of the enforceability of the restraint of trade clause.
[91] J W Chafer Ltd v Lilley [1947] LJR 231. See also Perls v Saalfelf [1892] 2 Ch 149; Technograph Printed Circuits Ltd v Chalwyn Ltd [1967] FSR 307.
[92] J W Chafer Ltd v Lilley [1947] LJR 231, 234.
On the other hand, a different approach was taken in Kerchiss v Colora Printing Inks Ltd,[93] by Danckwerts J. The requirement that the employer not withhold consent unreasonably was one reason in that case why the clause was found to be enforceable. His Lordship rejected the submission that the clause involved merely the subjective consideration of the employer since 'there is always the sanction hanging over [the employer] that the matter can be taken further and the decision of an independent person obtained'.[94]
[93] Kerchiss v Colora Printing Inks Ltd [1960] RPC 235.
[94] Kerchiss v Colora Printing Inks Ltd [1960] RPC 235, 240.
These conflicting cases are discussed extrajudicially by Heydon J in The Restraint of Trade Doctrine.[95]His Honour preferred the approach of Roxburgh J for two reasons. First, the contrary approach would mean that the expedient of employer consent would validate potentially very wide restraint clauses which could be exacted against employees who could not afford the terror and expense of litigation. Secondly, it is for the parties to make the agreement not the court, as instanced by the unenforceability for reasons of uncertainty of a clause which prohibits an employee from engaging in competition 'so far as the law allows'.[96]
[95] J D Heydon The Restraint of Trade Doctrine (3^rd ed, 2010) 173-174.
[96] Referring to Davies v Davies (1887) 36 Ch D 359.
The arguments made by Heydon J are powerful reasons why an employer consent clause could not operate to make enforceable a wide restraint clause which otherwise extends considerably further than the protection of the employer's legitimate interests.
Further, in the absence of submissions to the contrary, I proceed on the basis that, as Mr Neil suggested, the 'reasonableness' qualification upon the employer's consent is not co‑extensive with reasonableness required in assessing the enforceability of the restraint. In other words, consistently with the decision of Roxburgh J it might be reasonable for an employer to withhold consent purely on the grounds that a rival firm was in competition with the employer. This assumption seems to have been made by Danckwerts J in a decision six years earlier than Kerchiss.[97] This means that since the withholding of consent based on the mere existence of competition might be reasonable in some cases, the consent provision cannot be sufficient to justify the enforceability of the restraint.
[97] Marchon Products Ltd v Thornes [1954] 71 RPC 445, 451.
Nevertheless, it may still be that the employee consent clause could affect the scope of the restraint. For this reason it is strongly arguable that it should be considered as part of that assessment. The requirement that Emeco must have regard to its legitimate interests in light of the purposes of the contract before refusing consent to Mr O'Shea may be a real limitation upon the scope of the restraint.
If this limitation is taken into account, its effect upon the Competitor Restraint may be different from its effect on the Non‑Solicitation or Client Restraints. It is one matter to require an employee to seek employer consent before going to work for a rival in circumstances where the employee has been privy to confidential information and has built up customer connections. It is another matter, and a greater infringement upon liberty, to require the employee, in a new occupation, to seek employer consent every time contact occurs which might infringe a wide solicitation restraint or client restraint.
Ultimately, however, it is not necessary to decide the extent to which this employer consent clause should weigh in favour of the enforceability of the restraints. No significant reliance was placed on the clause by Emeco and I have reached the conclusion below that the Competitor Restraint is, in any event, enforceable and the Non-Solicitation and Client Restraints are, in any event, unenforceable.

The enforceability of the Competitor Restraint

The interests which can support a competitor restraint

Mr Neil submitted that a competitor restraint could only be supported by the employer's interest in protecting confidential information. He said that it was a matter of logic that an employer's interest in customer connection could not justify a competitor restraint because new employment with a competitor says nothing about dealing with customers. The interest that an employer has in relation to the employee's customer connection is an interest which could support only a non‑solicitation restraint or a client restraint.
It may be that, even as a matter of pure logic, there are some industries where the nature of the business is such that personal customer connection is the foundation of the business and that this interest alone could easily suffice to justify a competitor restraint. More generally, it is difficult to see why customer connection cannot support a competitor restraint in circumstances in which, as often occurs, the customer connection interest and the confidential information interest are closely related. As Professor Blake observed in his seminal article:[98]
to a considerable extent, the protection extended to customer relationships is an offshoot of the protection of confidential information... The line is so difficult to draw that employers' petitions for injunctive relief to protect customer relationships seldom fail to try to persuade the court that the employee has had access to confidential information regarding the customers or other facts of the business as well.
[98] H Blake 'Employee Covenants not to Compete' (1960) 73 Harv Law Rev 625, 670.
Hence, the assumption upon which many cases have proceeded is that there is there is no reason of principle why an employer's interest in customer connection is not sufficient, at least together with its interest in confidential information, to justify a competitor restraint even in circumstances in which neither interest alone might have been sufficient.
In the leading text on restraint of trade, Justice Heydon considers the scenario (which is not the case here) of a covenant in which the prohibited area for an employee to work is defined by reference to all the employer's places of operation rather than the employee's. He explains that such covenants are difficult to sustain, but that such a covenant is 'likeliest to be upheld' based upon customer connection 'where a non‑solicitation covenant is likely to be ineffective because the customers will come to the ex-employee whether they are solicited or not.'[99]
[99] J D Heydon The Restraint of Trade Doctrine (3rd ed, 2008) 157.
A number of authorities also support competitor restraints on the basis of both of these interests. For instance, in a commonly quoted passage in HerbertMorris, Limited v Saxelby[100] Lord Parker explained that covenants against competition by a servant 'have been upheld … on the ground that [the servant] might obtain such personal knowledge of and influence over the customers of his employer, or such an acquaintance with his employer's trade secrets as would enable him, if competition were allowed, to take advantage of his employer's trade connection or utilize information confidentially obtained.'
[100] Herbert Morris, Limited v Saxelby [1916] 1 AC 688, 709 (Lord Parker). See also Fitch v Dewes [1921] 2 AC 158, 165 (Lord Birkenhead speaking of the 'intimacies and the knowledge'); Elsley v J.G. Collins Insurance Agencies Limited [1978] 2 SCR 916, 925-928 (Dickson J for the court); Pearson v HRX Holdings Pty Ltd [2012] FCAFC 111 [47] (the court).
In the High Court, Latham CJ, in dissent but not on this statement of principle, described customer connection as a matter which could support a competitor restraint:[101]
Where an employee is in a position which brings him into close and personal contact with the customers of a business in such a way that he may establish personal relations with them of such a character that if he leaves his employment he may be able to take away from his former employer some of his customers and thereby substantially affect the proprietary interest of that employer in the goodwill of his business, a covenant preventing him from accepting employment in a position in which he would be able to use to his own advantage and to the disadvantage of his former employer the knowledge of and intimacy with the customers which he obtained in the course of his employment should, in the absence of some other element which makes it invalid, be held to be valid.
[101] Lindner v Murdock's Garage [1950] HCA 48; (1950) 83 CLR 628 at 636.

This passage was approved by Doyle CJ in the leading decision in the Full Court of the Supreme Court of South Australia in N E Perry Pty Ltd v Judge.[102]
[102] N E Perry Pty Ltd v Judge [2002] SASC 312 [22].
More recently, in AGA Assistance Australia Pty Ltd v Tokody,[103] McMurdo J referred to both customer connections and information about the employer's dealings with clients, as advantages which the employee could bring to a new employer. His Honour concluded that the protection of these interests of the plaintiff warranted a restraint which prevented the defendant from working in a competing business in Australia for a limited time.[104]
[103] AGA Assistance Australia Pty Ltd v Tokody [2012] QSC 176 [32].
[104] AGA Assistance Australia Pty Ltd v Tokody [2012] QSC 176 [34].
Finally, some of the reasons why the customer connection interest can support a competitor restraint, and not merely a non‑solicitation restraint were explained by the Full Federal Court in Pearson v HRX Holdings Pty Ltd[105] to which reference was made by Mr de Kerloy. They include the risk that the non‑solicitation clause might not provide practical protection to an employer because the employer might not become aware of a breach.
[105] Pearson v HRX Holdings Pty Ltd [2012] FCAFC 111 [51].
In Pearson v HRX Holdings Pty Ltd, the Full Federal Court upheld a competitor restraint which restrained Mr Pearson for two years from directly or indirectly carrying on a Restrained Business, alone or in partnership or joint venture with anyone else. Mr Pearson was also restrained from being directly or indirectly 'concerned with or interested' in a Restrained Business, including as an employee. Restrained Business was defined as
a business or operation similar to or competitive with the business of a Group Company, including without limitation a business involved in the outsourcing of recruitment services (often referred to as Onsite or Recruitment Process Outsourcing) or any other HR Outsourcing areas that HRX is operating in at the time of leaving the company.
Mr Pearson was an employee of a company, HRX, which offered recruitment process outsourcing and consulting services, human resources outsourcing and recruitment technology to government and private enterprise. HRX developed techniques, technological systems, facilities and strategies for its clients. At the time of Mr Pearson's resignation, HRX operated in Australia and New Zealand, although its policy was to follow clients into business opportunities outside Australia and New Zealand.[106] Like the role of business development manager in this case, Mr Pearson was HRX's primary presenter to prospective clients in its endeavour to secure business.[107]
[106] Pearson v HRX Holdings Pty Ltd [2012] FCAFC 111 [13].
[107] Pearson v HRX Holdings Pty Ltd [2012] FCAFC 111 [12], [37], [46] - [49].
Mr Pearson knew confidential information of HRX which was described as the 'techniques and facilities used by HRX to sell its services and its client retention strategies'.[108] But the enforceability of the particular competitor restraint in that case (cl 14.4) was not supported by the Full Federal Court on the basis of confidential information. It was supported on the basis of 'HRX's interests, both in protecting its customer connections and in ensuring the diligent and faithful pursuit by Mr Pearson of business opportunities for HRX'.[109]

Did Emeco have an interest in protecting confidential information?

[108] Pearson v HRX Holdings Pty Ltd [2012] FCAFC 111 [14].

[109] Pearson v HRX Holdings Pty Ltd [2012] FCAFC 111 [62]. See also at [51].

Mr Neil said that there was no confidential information which could support the Competitor Restraint. If, at the time of Mr O'Shea's employment contract on 3 October 2011, there was no reasonable possibility of Mr O'Shea obtaining confidential information, then it may be that the Competitor Restraint could not have been justified solely by reference to Emeco's interest in protecting against Mr O'Shea exploiting his customer connections. But I do not accept that this is the case.
As I explain below, Emeco's interest in protecting its confidential information is sufficient to justify the Competitor Restraint. This is particularly so when it is combined with Emeco's interest in protecting exploitation of Mr O'Shea's customer connection, which interest, like Pearson, might even have been sufficient on its own.

Precise identification of the confidential information is not necessary

I accept that the starting point in relation to a competitor restraint is that these restraints are often justified on the basis of an interest of the employer in confidential information. However, it is not necessary to identify precisely the confidential information about which, at the date of contract, Emeco could reasonably have expected Mr O'Shea would be exposed.
There is sometimes a difficulty in drawing a precise line between confidential and non‑confidential information. In Miles v Genesys Wealth Advisers Limited,[110] in a passage contained in part of the judgment of Hodgson JA with which the other judges agreed, his Honour explained that the case fell into the category where 'there is a restraint on engaging in certain conduct, by reference to the potentiality for confidential information to be used to the promisee's detriment'. His Honour explained that different considerations apply in such cases from an equitable or contractual obligation of confidentiality or the existence of a trade secret. In the latter cases 'it is plainly necessary to identify with some precision the confidential information'. But this is not so in relation to the interest concerned with the potentiality for confidential information to be used to the promisee's detriment.
[110] Miles v Genesys Wealth Advisers Limited [2009] NSWCA 25 [22].
Hodgson JA quoted Lord Denning MR's statement in Littlewoods Organisation Ltd v Harris:[111]
It is thus established that an employer can stipulate for protection against having his confidential information passed on to a rival in trade. But experience has shown that it is not satisfactory to have simply a covenant against disclosing confidential information. The reason is because it is so difficult to draw the line between information which is confidential and information which is not: and it is very difficult to prove a breach when the information is of such a character that a servant can carry it away in his head. The difficulties are such that the only practicable solution is to take a covenant from the servant by which he is not to go to work for a rival in trade. Such a covenant may well be held to be reasonable if limited to a short period. (emphasis added)
[111] Littlewoods Organisation Ltd v Harris [1977] 1 WLR 1472, 1479.
In other words, the court must be satisfied of the anticipated existence of confidential information at the time of contract, and of potential prejudice to the employer's interests from that information. But it is not necessary for an employer to identify that confidential information with precision. If the confidential information and the non‑confidential information cannot be separated it will be impossible to identify confidential information with precision at the date of contract.
An example of a case involving imprecise evidence about confidential information is one of the leading decisions in this jurisdiction: Smith v Nomad Modular Building Pty Ltd.[112] In that case the defendant had been employed by the plaintiff in the business of design, manufacture, installation and hire of transportable buildings. The defendant ceased employment with the plaintiff and entered a new contract of employment with Australian Portable Buildings Pty Ltd. His employment contract with the plaintiff contained a competitor restraint preventing him from being engaged or concerned, directly or indirectly, with any competing business in Queensland or Western Australia for six months. There was also a non‑solicitation clause.
[112] Nomad Modular Building Pty Ltd v Smith [2007] WASC 117 [1].
The plaintiff in Smith sought to enforce those clauses, and a confidential information clause, by an injunction. The defendant argued that the information he learned during his employment with the plaintiff 'was of such a general non‑specific nature as to not fall within the definition' and that the information he did have was not confidential.[113] It was therefore submitted that there was no legitimate interest which the competitor restraint sought to protect.
[113] Nomad Modular Building Pty Ltd v Smith [2007] WASC 117 [12].
The competitor restraint was held to be reasonable and an injunction was granted. At first instance, Master Sanderson said that the employee inevitably picked up concepts and technical and operational information used by the company. The employee also had an insight into the financial affairs of the plaintiff including confidential information concerning work which had been obtained, work which had been tendered for and tenders on which the plaintiff had been unsuccessful.
Master Sanderson said:[114]
It is not possible to say with any precision precisely what the defendant knows which falls within the definition of confidential information. There is no suggestion that he has removed any sensitive documents from the plaintiff or that he has in some way expropriated trade secrets or lists of clients which will assist him in his new employment. Only he knows what he knows and any attempt to define the limit of his understanding is pointless.
[114] Nomad Modular Building Pty Ltd v Smith [2007] WASC 117 [13] - [14].
The Court of Appeal affirmed the master's decision. McLure JA held that the finding in relation to confidential information was a sufficient interest to justify the competitor restraint.[115] Pullin JA observed the broad terms in which the confidential information was expressed in the evidence, and said this of the monthly management reports received by the appellant:[116]
the respondent charged many of its customers, was aware of work the respondent was seeking to obtain in the course of his employment, was aware of major tenders lost by the respondent and he gained information about the respondent's profits and margins of revenue over costs.
[115] Smith v Nomad Modular Building Pty Ltd [2007] WASCA 169 [19].
[116] Smith v Nomad Modular Building Pty Ltd [2007] WASCA 169 [31].
To the submission that this information was not sufficiently confidential, his Honour said that:[117]
The appellant was a top level employee and his salary package reflected this. As the general manager of manufacturing he was privy to much strategic and operational information which a competitor would be interested to know and which the respondent was entitled to keep confidential by contractual means.
[117] Smith v Nomad Modular Building Pty Ltd [2007] WASCA 169 [39].
Although every case depends on its own facts, it is noteworthy that the information in this case which Emeco claimed to be confidential went considerably further than the evidence in Smith concerning work which had been obtained, work which had been tendered for, profit margins and tenders on which the plaintiff had been unsuccessful.

The expected confidential information

In tightly reasoned submissions Mr Neil submitted that no competitor restraint could ever be justified in the dry hire industry because (i) the information referred to by Emeco is not confidential, and (ii) the information is not in a form which can be carried away in a useful way, and it cannot be used, and (iii) there is no risk of detriment.[118]
[118] ts 185.
There are five reasons why this submission should not be accepted.
First, there is the existence of confidential information clauses in both Mr O'Shea's employment contract with Emeco and Mr O'Shea's employment contract with NPE.[119] The existence of these provisions in both contracts militates against acceptance of the proposition that this was not an industry with any confidential information, which could be used to the detriment of a business.
[119] Exhibit 14.
In Mr O'Shea's NPE contract, confidential information was defined to include 'financial information concerning the Group (including, but not limited to, trade practices, pricing policies and customer lists)'. The presence of this cause suggests that NPE considers that there is confidential information in this industry which can be used potentially to its detriment. And, as explained above, one reason for the need for a competitor restraint is because it is difficult to draw the line between information which is confidential and information which is not.
Secondly, a reason why it could be expected that Mr O'Shea would retain confidential information which could be used to the detriment of Emeco is recital (d) to the restraint provision in Mr O'Shea's employment contract. In that recital he acknowledged that 'it is in Emeco's legitimate business interests to protect the use by you or other of Confidential Information to its detriment'.
Although a contract cannot merely by reciting background, or expanding the definition of confidential information, convert the unreasonable into the reasonable, '[t]he assessment of the contractual parties on that subject is not determinative but neither is it irrelevant, particularly where, as here, competent parties contract at arms length by reference to their commercial assessments and interests'.[120]
[120] Amoco Australia Pty Ltd v Rocca Bros Motor Engineering Co Pty Ltd [1973] HCA 40; (1973) 133 CLR 288, 294 (Menzies J), 307 (Walsh J) 317 (Gibbs J); Smith v Nomad Modular Building Pty Ltd [2007] WASCA 169 [17] (McLure JA; Buss JA agreeing).
Thirdly, a further reason why it is reasonable to expect that Mr O'Shea would retain confidential information which could be used to the detriment of Emeco is the words of the definition of confidential information in Mr O'Shea's contract of employment with Emeco. It was not suggested that this clause was unenforceable. Indeed, Mr O'Shea's undertaking to the court replicated the confidential information clause.
In the confidential information clause in Mr O'Shea's employment contract the parties agreed that:[121]
'Confidential Information' includes (but is not limited to) the following:
(1)trade secrets of Emeco;
(2)information about the business and affairs of Emeco or the Corporate Group including information about products, services, financial accounts, reports of Emeco and clients of Emeco, marketing and/or strategy plans, commercial and business plans, client proposals, sales plans, client prospects, information about professional fees, pricing information, supplier lists, research, financing, inventions, designs, precedents, procedures or processes, sales and training materials, and operational information and methods of Emeco;
(3)information about Clients of Emeco, such as their specific requirements, arrangements and past dealings with Emeco;
(4)names and addresses of Clients of Emeco or the Corporate Group, Client lists, business cards and diaries, calendars or schedulers;
(5)computer data bases and computer software; and
(6)all other information obtained from Emeco or the Corporate Group or obtained in the course of your employment with Emeco, that is by its nature confidential.
[121] Exhibit C (Affidavit of Mr Stubbs) GRS 2.
Although a contractual term is not conclusive of the confidentiality of information, it is permissible to have regard to a clause which specifies the information which is considered to be confidential for the purposes of identifying the information which is properly regarded as confidential.[122]
[122] Printers & Finishers Ltd v Holloway [1965] 1 WLR 1, 6 (Cross J).
As I have explained above at [28] and [35], much of this confidential information (as defined) concerned matters to which a business development manager was exposed regularly.
Fourthly, as I have explained, at the core of the role of a business development manager was to obtain the trust of a client including knowledge of confidential issues particular to an individual client.
In McPherson v Moiler,[123] a local manager of a stock and station agency in a local town was restrained from competing in that town because of the knowledge as a manager which he could use in the employment of a competitor to the detriment of his employer: 'particular matters, specific matters, specific individuals, specific dealings, which would be very material, and of the greatest possible assistance to another competitor'.
[123] McPherson v Moiler (1920) 20 SR (NSW) 535, 542 (Harvey J).
Again, in Cash Orders (Amalgamated) Ltd v Haynes,[124] Long Innes CJ in Eq spoke of the importance of the defendant's knowledge of customers: 'financial ability and stability, and the gullibility, proneness to extravagance and susceptibility to persuasion'.
[124] Cash Orders (Amalgamated) Ltd v Haynes (1937) 37 SR (NSW) 157, 173.
Fifthly, another reason why it could reasonably be expected that there was confidential information of Emeco's to which Mr O'Shea would have access and which could be used to Emeco's detriment by a competitor, is the evidence of what actually occurred.
As I have explained above at [68], it is permissible to consider evidence of events subsequent to the contract in order to assess what the parties might reasonably have expected about the extent and nature of confidential information, and the manner in which it could affect Emeco. Some of the evidence also concerned the period from 21 October 2010 until Mr O'Shea's second employment contract (3 October 2011) which is the subject of this litigation.
For the reasons which follow, the evidence shows that it could reasonably have been expected that Mr O'Shea would obtain confidential information which could be used by a competitor, to the detriment of Emeco.
The key determinants of whether Emeco would succeed in a tender were availability of equipment, capability of Emeco to fulfil the contract, and price.[125] In relation to ongoing contracts, and whether those contracts would be terminated early, or renewed, another key determinant would be the relationship that the business development manager had with the customer. As I have explained, this maintenance of long term relationships and trust was a key function of the role of business development manager.
[125] ts 82 (Mr Halls).
I accept Mr Neil's submission that some of the information which witnesses called by Emeco described as confidential was not in fact confidential. For instance, the price offered to a particular customer, or the machine hired to a particular customer, was a matter known to the customer. And there was nothing to prevent the customer from revealing that information to others.
In oral submissions Mr de Kerloy conceded that knowledge of price was not the confidential information which was the relevant interest of Emeco; but one relevant interest upon which he relied in oral submissions was not price but pricing strategies.[126]
[126] ts 204.
Emeco did not establish that Mr O'Shea's knowledge of pricing strategies could be used by a competitor to Emeco's detriment for the following reasons.
Evidence was given for Emeco concerning a number of items which were not public knowledge and which were part of Emeco's pricing strategies. One of those was Emeco's target internal rate of return. The internal rate of return was not publicly available. Mr O'Shea was aware of the range which was Emeco's required internal rate of return.
The difficulty with the submissions that an internal rate of return is confidential information which could be used to the detriment of Emeco as knowledge of pricing strategy is that the knowledge of this internal rate of return cannot meaningfully be translated into an estimated price. If a competitor were aware of the internal rate of return, the competitor would also need to be aware of the pricing model (the LCC) used by Emeco to generate the price required by that internal rate of return. Assuming that the competitor knew all the formulas in the excel pricing model, the competitor would still need to enter the many factors which would be particular to an individual contract including hours, maintenance responsibilities, labour rate, utilisation before the model would reveal a potential price.[127]
[127] ts 78 (Mr Halls).

In contrast with the evidence of Mr Stubbs, this is yet another area where Mr O'Shea's affidavit evidence at the interlocutory hearing was misleading.
In his affidavit for the interlocutory hearing Mr O'Shea said that he 'developed a good business relationship with … four main clients' of Emeco. But although Barrick Ltd was a fifth client with whom he was actively involved, Mr O'Shea did not mention Barrick Ltd as one of these clients in his interlocutory injunction.[220] Mr O'Shea said that he wasn't involved with Barrick Ltd when he left Emeco's employment. He did not think that it was relevant to inform the court that he had five main clients, not four.[221]
[220] ts 22 (Mr O'Shea).
[221] ts 21 (Mr O'Shea).
For these reasons, I consider that it is appropriate to grant an injunction to protect Emeco's rights.

The terms of the injunction which should be granted

It follows from my reasons that Emeco is entitled to an injunction to enforce the Competitor Restraint. However, the terms of the injunction which are sought by Emeco in relation to the Competitor Restraint are too broad.
The Competitor Restraint prohibits Mr O'Shea only from performing 'work for or provid[ing] products or services to a business competitive with the business of Emeco'. The proposed restriction against Mr O'Shea 'accepting employment with' NPE is not a restriction contained in the Competitor Restraint. The terms of the injunction might arguably prevent Mr O'Shea from receiving any remuneration from NPE under the indemnity during the six month period of restraint even if Mr O'Shea performed no work for nor provided any services to NPE. This would be beyond the terms of the Competitor Restraint.
It is also unclear why Emeco has rewritten the terms of the Competitor Restraint which prohibit Mr O'Shea from providing products or services to 'a business competitive with the business of Emeco' into the different language of 'any dry hire company which competes with the business of [Emeco]'. There was no submission, nor any direct evidence, which suggested that there was any threat that Mr O'Shea might perform work for, or provide products or services, to a business competitive with the business of Emeco other than NPE. The only evidence of a request for 'prior written consent' by Mr O'Shea to perform work for a competitor concerned Mr O'Shea's employment with NPE.[222] An injunction should not go further than the circumstances of the case require.[223]
[222] Exhibit 17.
[223] Tobacco Institute of Australia Ltd v Australian Federation of Consumer Organisations Inc (1992) 38 FCR 1, 18 (Sheppard J).
I have not heard any submissions precisely on the point, but from the submissions at trial I can see no difficulty with an injunction which restrains Mr O'Shea from 'working for or provid[ing] products or services to NPE' in Western Australia for the six month period of the restraint. In combination with the undertaking which Mr O'Shea has given to the court, the terms of such an injunction would protect the legitimate interests of Emeco by reference to the enforceable terms of Mr O'Shea's employment contract with Emeco.

Conclusion

The Competitor Restraint is enforceable and an injunction should be issued to restrain conduct inconsistent with that restraint. The parties should confer on the appropriate terms of an injunction and any other orders to give effect to these reasons. If agreement can be reached, an agreed minute of orders should be sent to my associate by 4pm on Friday 21 September 2012. Absent agreement, each party should submit a minute of proposed orders and I will deal with the issues which arise on the papers or at a short hearing to follow.

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION: EMECO INTERNATIONAL PTY LTD -v- O'SHEA [No 2] [2012] WASC 348 (S)

CORAM: EDELMAN J

HEARD: 15 OCTOBER 2012

DELIVERED : 17 OCTOBER 2012

FILE NO/S: CIV 2310 of 2012

BETWEEN: EMECO INTERNATIONAL PTY LTD
Plaintiff
AND
BRENDAN O'SHEA
Defendant

Catchwords:

Practice and procedure - Application to vary order before order perfected - Proposed variation not reflecting the terms of the enforceable restraint - Not appropriate to express a view on a variation application concerning a matter of construction of a contractual restraint which was not raised at trial

Practice and procedure - Costs - Indemnity costs - Calderbank offers made prior to trial - Calderbank offers refused - Refusal of Calderbank offers was reasonable - Appropriate considerations for assessment of party and party costs where there are in substance several causes of action - Order that the defendant pay 90% of the plaintiff's costs to be taxed on a party and party basis

Legislation:

Nil

Result:

Application to vary terms of the injunction dismissed
Indemnity costs application dismissed
Defendant to pay 90% of the plaintiff's costs of the trial on a party and party basis

Category: B

Representation:

Counsel:

Plaintiff: Mr K J Mony De Kerloy
Defendant: Mr I Neil SC

Solicitors:

Plaintiff: Freehills
Defendant: Keystone Lawyers

Case(s) referred to in judgment(s):

Amaca Pty Ltd v Hannell [2007] WASCA 158 (S)
Calderbank v Calderbank [1975] 3 WLR 586
Emeco International Pty Ltd v O'Shea [2012] WASC 282
Emeco International Pty Ltd v O'Shea [No 2] [2012] WASC 348
Ford Motor Company of Australia Ltd v Lo Presti [2009] WASCA 115; (2009) 41 WAR 1
Hazeldene's Chicken Farm Pty Ltd v Victorian WorkCover Authority (No 2) [2005] VSCA 298
J C Williamson Ltd v Lukey and Mulholland [1931] HCA 15; (1931) 45 CLR 282
Keet v Ward [2011] WASCA 139
Maggbury Pty Ltd v Hafele Australia Pty Ltd [2001] HCA 70; 210 CLR 181
McKay v Commissioner of Main Roads (No 7) [2011] WASC 223 (S)
Minister for Education v Klein [2005] WASCA 185 (S)
Orleans Investments Pty Ltd v MindShare Communications Ltd [2009] NSWCA 40; (2009) 254 ALR 81

TABLE OF CONTENTS

Introduction
The terms of the injunction
The costs orders

Should indemnity costs be awarded?
The appropriate order for party and party costs

EDELMAN J:
(These are the edited reasons which were delivered orally on 15 October 2012 after the hearing of these applications.)

Introduction

On 20 September 2012 I delivered my primary reasons for decision in this matter.[224] At the conclusion of my reasons I said that the parties should confer on the appropriate terms of an injunction and any other orders to give effect to the reasons. I indicated that in the absence of agreement about the orders, each party should submit a minute of proposed orders and I would deal with the issues which arose on the papers or at a short hearing to follow.
[224] Emeco International Pty Ltd v O'Shea [No 2] [2012] WASC 348.
The parties both submitted proposed terms for the injunction. Emeco sought to have an oral hearing in relation to costs, but Mr O'Shea did not. Neither party sought to make any submissions about the terms of the injunction which were sought. The injunction was ordered in terms which reflected the Competitor Restraint. I gave short unpublished reasons explaining the grant of the injunction in these terms.
At the hearing this morning, Mr O'Shea applied to vary the terms of the injunction, and both parties both made submissions about the appropriate costs orders. Emeco sought an order for indemnity costs based on Calderbank offers made to Mr O'Shea. The application to vary the terms of the injunction was dismissed for the reasons below. The indemnity costs application should also be dismissed. The appropriate order for costs is that Mr O'Shea pay 90% of Emeco's costs to be taxed, if not agreed, on a party and party basis.

The terms of the injunction

In my primary reasons for decision at [256] I explained that the Competitor Restraint was enforceable and that Emeco was entitled to an injunction to enforce the Competitor Restraint. I explained that it was not clear why Emeco sought an injunction which, in some respects, was significantly different from the terms of the Competitor Restraint ([257]-[258]).
I indicated in my primary reasons that I had not heard submissions concerning the precise wording of an injunction but that I could see no difficulty with a restraint which prevented Mr O'Shea from 'working for or provid[ing] products or services to NPE' in Western Australia for the six month period of the restraint. This was the minimum to which I considered Emeco would be entitled and it reflected part of the wording of the Competitor Restraint.
Emeco provided a revised minute seeking an injunction in terms which closely replicated the terms of the Competitor Restraint and which removed the concerns I had raised in my reasons about Emeco's order going beyond the terms of the Competitor Restraint. In granting an injunction, equity acts to enforce a legal right. I explained in my unpublished reasons that in all the circumstances of this case, in particular the conduct of Mr O'Shea,[225] I was satisfied that it was appropriate that the court should order an injunction to protect Emeco's rights in terms which replicate, as precisely as possible, the terms of the Competitor Restraint. The order made was:
[225] Maggbury Pty Ltd v Hafele Australia Pty Ltd [2001] HCA 70; 210 CLR 181, 220 [104] (Callinan J).
1.Until 3 February 2012 the defendant must not, within Western Australia, (either directly or indirectly), provide or take part in the provision of consultancy services or otherwise perform work for or provide products or services to a business competitive with the business of the plaintiff (including but not limited to National Plant & Equipment Pty Ltd ABN 67 078 654 323).
As Dixon J said in J C Williamson Ltd v Lukey and Mulholland[226] 'if ... a clear legal duty is imposed by contract to refrain from some act, then, prima facie, an injunction should go to restrain the doing of that act'. Nevertheless, an injunction should be expressed in terms which make clear what is to be done and what is not to be done and the formulation of an injunction should take into account the possibility of uncertainty and oppression.[227]
[226] J C Williamson Ltd v Lukey and Mulholland [1931] HCA 15; (1931) 45 CLR 282,299.
[227] Orleans Investments Pty Ltd v MindShare Communications Ltd [2009] NSWCA 40; (2009) 254 ALR 81, 108 [97] (Giles JA; Spigelman CJ and Allsop P agreeing).
On 12 October 2012, Mr O'Shea filed a notice of originating motion seeking variation of the terms of my injunction. The variation proposed by Mr O'Shea was as follows:
Until 3 February 2012 the defendant must not, ~~within Western Australia,~~ (either directly or indirectly), provide or take part in the provision of consultancy services or otherwise perform work for or provide products or services to a business competitive with the business of the plaintiff in relation to the competitor's business in Western Australia (including but not limited to National Plant & Equipment Pty Ltd ABN 67 078 654 323).
The variation involved removal of the words which I have struck through and insertion of the words which I have underlined.
The order made has not been perfected. I have power to reopen the order made. In Minister for Education v Klein,[228] Steytler J explained the principles governing the exercise of discretion to reopen an order which has not been perfected. His Honour said the following:
[228] Minister for Education v Klein [2005] WASCA 185 (S) [7].
As the High Court has reaffirmed in De L v Director-General, NSW Department of Community Services(No 2) [1997] HCA 14; (1997) 190 CLR 207 at 215, there is no doubt that that Court may reopen unperfected judgments or orders if it is convinced that it has proceeded 'on a misapprehension as to the facts or the law' (Autodesk Inc v Dyason(No 2) [1993] HCA 6; (1993) 176 CLR 300 at 302) or where 'there is some matter calling for review' (Smith v New South Wales Bar Association (No 2) [1992] HCA 36; (1992) 176 CLR 256 at 265) or where 'the interests of justice so require' (Autodesk at 322, per Gaudron J). The power is one which, the High Court has said, must be exercised with great caution (State Rail Authority of NSW v Codelfa Construction Pty Ltd (No 2) [1982] HCA 51; (1982) 150 CLR 29 at 38; Wentworth v Woollahra Municipal Council (No 2) [1982] HCA 41; (1982) 149 CLR 672 at 684 and Autodesk at 302) and the circumstances that will justify a rehearing, must be 'quite exceptional': State Rail at 38 per Mason and Wilson JJ. That is so because of the obvious public interest in the finality of litigation: De L at 215; Autodesk at 302; State Rail at 38; and Wentworth at 684. However, the judgments of the High Court reveal a preparedness by that Court to reopen an unperfected judgment or order where an applicant can show that 'by accident without fault on his part he has not been heard': Wentworth at 684, per Mason ACJ, Wilson and Brennan JJ; and Autodesk at 302, per Mason CJ, 308, per Brennan J, and 312, per Deane J. That is because a court should not pronounce a judgment against a person on a ground which that person has not had an opportunity to argue: Pantorno v The Queen [1989] HCA 18; (1989) 166 CLR 466 and Autodesk, at 308, per Brennan J.
Counsel for Emeco, Mr de Kerloy, submitted that Mr O'Shea had the opportunity to make submissions concerning the appropriate terms of the injunction at trial, and after delivery of my reasons. But no submissions were made on either occasion, including no submissions in relation to the draft order (which I made) which was sought by Emeco and sent to Mr O'Shea before it was filed.
However, in circumstances in which no submissions were made concerning the precise form of the order, if the terms of the order which I made did not accurately reflect my reasons and the terms of the Competitor Restraint, then I would have been prepared to reopen the order.
Senior counsel for Mr O'Shea, Mr Neil, conceded that it was appropriate that the order should reflect the terms of the Competitor Restraint. This is an appropriate concession for the reasons I have explained and which were set out in my unpublished judgment. However, Mr Neil's submission was that without the variations the terms of the order it would not reflect the proper construction of the Competitor Restraint, nor would it reflect my reasons at [172].
To reiterate, the Competitor Restraint is as follows:
You agree not to engage (either directly or indirectly) in each or any of the activities specified in sub-clause (a)(1) - (4), within the areas and for the periods after the Termination Date as specified in sub-clause (b)(1), without the prior written consent of Emeco:
a)1.provide or take part in the provision of consultancy services or otherwise perform work for or provide products or services to a business competitive with the business of Emeco [the Competitor Restraint];
Subclause (b)(1) provided as follows:
b)1.In Western Australia for a period of 6 months, unless that period is held invalid for any reason by a court of competent jurisdiction, in which case, 3 months.
Reading the Competitor Restraint as a whole, it involves an undertaking which can be expressed by inserting the relevant parts of the substantive restraint in place of the general words 'any of the activities specified'. The clause then reads as follows:
... not to engage (either directly or indirectly) in [the activity of]
provide or take part in the provision of consultancy services or otherwise perform work for or provide products or services to a business competitive with the business of Emeco,
within the area [i]n Western Australia for a period of 6 months.
As to [172] of my reasons, that paragraph does little more than paraphrase the Competitor Restraint. In that paragraph I said:
[T]he geographic scope of Mr O'Shea's Competitor Restraint, which is a restriction confined to businesses competitive with the business of Emeco[,] in Western Australia, was reasonable. There was evidence that Emeco had commenced operations in Western Australia in 1972 and that Western Australia was a core part of its business. The Competitor Restraint imposed upon Mr O'Shea was confined to Western Australia.
During oral argument this morning I indicated that some confusion may have arisen from the omission of a comma after the word Emeco. The insertion of the comma is consistent with the presence of a comma in the Competitor Restraint after the words 'any of the activities specified in subclause (a)(1) ‑ (4)'.
The terms of the injunction granted differ from the Competitor Restraint in only two potentially material respects. First, the words 'including but not limited to National Plant & Equipment' are inserted at the conclusion of the injunction. There can be little difficulty with this difference. Those words simply clarify a matter which was common ground at trial; that NPE was a competitor of Emeco.
The second difference is that the words 'within Western Australia' effectively appear before the description of the prohibited activity rather than after it. I do not consider that this is material. Indeed, Mr Neil submitted that the different positioning of the words made no material difference to the construction which he urged. His argument was that the proposed variation removed any doubt that the proper construction of the Competitor Restraint was to limit the operation of the Competitor Restraint to situations in which the prohibited activity concerned the competitor's business within Western Australia.
In other words, the submission for Mr O'Shea was that the re‑draft of the clause made it clear that Mr O'Shea could perform work for NPE in Western Australia, provided that the work performed was not in relation to a business competitive with the business of Emeco in Western Australia. So, it was submitted, Mr O'Shea should be entitled to send emails or take phone calls in Western Australia in relation to NPE's South Australian business. None of these matters were raised at trial.
The simple reason why this submission should be rejected is because, whether or not the construction proposed by Mr Neil is correct, the proposed variation plainly would not reflect the Competitor Restraint in other significant respects. For instance, the proposed variation would have the effect that Mr O'Shea was prohibited from performing work for NPE anywhere in the world if the work performed competed with the business of Emeco in Western Australia. This would place an unlimited geographic constraint upon Mr O'Shea's movement. This does not reflect the words of the Competitor Restraint, nor does it reflect their proper construction.
I do not consider that it is appropriate for me to go further and express a view concerning the construction of the Competitor Restraint on a matter which was not an issue at trial, and in relation to which no submissions were made at trial nor was any substantial submission made by Mr de Kerloy this morning. The application was to vary the terms of the injunction so that they would correspond with my reasons for decision (and, hence, the Competitor Restraint). It is not a re‑hearing of the matter, still less is it a situation in which it is appropriate to hear and decide a new issue.
It remains open to Mr O'Shea, if conditions change, to seek the dissolution of the injunction or to demonstrate that some modification of its ambit or duration is warranted by new circumstances not fully appreciated at the time of trial.[229]
[229] Maggbury Pty Ltd v Hafele Australia Pty Ltd [2001] HCA 70; 210 CLR 181, 212 [84] (Kirby J).
These are the reasons why, after hearing oral submissions from the parties concerning this application to vary the terms of the injunction, I dismissed the application with costs with reasons to be given concurrently with those on the costs application.

The costs orders

Two issues were raised in relation to costs. First, Emeco applied for indemnity costs on the basis of Calderbank offers which it made: Calderbank v Calderbank.[230] Secondly, there was the question of whether the proportion of Emeco's costs should be reduced. The two issues are inter-related. In particular, a Calderbank offer can affect the assessment of party and party costs.
[230] Calderbank v Calderbank [1975] 3 WLR 586.

Should indemnity costs be awarded?

The trial of this matter was heard on 4 and 5 September 2012. It was expedited following delivery of my reasons in relation to the interlocutory injunction on 8 August 2012.
On 10 August 2012, just under four weeks before trial, Emeco sent the first Calderbank offer. The first Calderbank offer was expressed to be open until the close of business on 15 August 2012.
The terms of the first Calderbank offer were as follows:
(i)Mr O'Shea refrain from (either directly or indirectly) accepting employment with or providing or taking part in the provision of consultancy services in Western Australia or otherwise performing work for or otherwise providing any products or services to National Plant and Equipment Pty Ltd or any dry hire company which competes with the business of Emeco until 3 January 2013;
(ii)that the proceedings will be discontinued by Emeco; and
(iii)that no orders will be sought as to costs and each party bear their own costs in the proceedings.
The offer was rejected.
Eighteen days later, on 28 August 2012, a second Calderbank offer was made to Mr O'Shea by Emeco. The second Calderbank offer was expressed to be open until the close of business the next day, 29 August 2012. In the second Calderbank offer the terms were as follows:
(i)That Mr O'Shea does not commence work for NPE nor any company or business in competition with Emeco until the close of business on Monday 1 November 2012.
(ii)That there be no order as to costs.
(iii)That the balance of the post‑termination obligations in Mr O'Shea's contract of employment remain on foot.
(iv)That the above terms be recorded in a consent order of the Supreme Court of Western Australia.
On 29 August 2012 that offer was rejected by Mr O'Shea.
The leading decision in this jurisdiction in relation to indemnity costs based on a Calderbank offer is Ford Motor Company of Australia Ltd v Lo Presti.[231]In that case, Buss JA (Wheeler JA agreeing) explained that the 'critical question' is whether an applicant can satisfy the court that the rejection of the offer by the other party was unreasonable.[232]
[231] Ford Motor Company of Australia Ltd v Lo Presti [2009] WASCA 115; (2009) 41 WAR 1.
[232] Ford Motor Company of Australia Ltd v Lo Presti [2009] WASCA 115; (2009) 41 WAR 1, 9 [21], [23].
As Buss JA said, the assessment of unreasonableness is a matter of judgment and impression.[233] A number of non‑exhaustive factors to consider in the assessment of whether the rejection of an offer is unreasonable include:
[233] Ford Motor Company of Australia Ltd v Lo Presti [2009] WASCA 115; (2009) 41 WAR 1, 8 [17] ‑ [19]; Hazeldene's Chicken Farm Pty Ltd v Victorian WorkCover Authority (No 2) [2005] VSCA 298 [23] ‑ [24].
(1)the stage of the proceeding at which the offer was received;
(2)the time allowed to the offeree to consider the offer;
(3)the extent of the compromise offered;
(4)the offeree's prospects of success, assessed as at the date of the offer;
(5)the clarity with which the terms of the offer were expressed; and
(6)whether the offer foreshadowed an application for indemnity costs in the event of the offeree's rejecting it.
Both parties made detailed submissions on each of these factors.
As to (5) and (6), I accept that the Calderbank offers were expressed in reasonably clear terms and that an application for indemnity costs was foreshadowed. As to (1) and (2), each of the offers was received shortly before the hearing. Given the expedited nature of the trial, the first offer was laudably made at an early stage in the process. Mr O'Shea had a reasonable time to consider that offer. The second offer was only open for a day but it was a variation on the first offer and would not have, and did not, require further time for consideration.
However, the other matters which I consider below raise weighty considerations which militate against an order for indemnity costs. In particular, as to (3) and (4), there are a number of powerful reasons why an order for indemnity costs is inappropriate.
First, and perhaps most significantly, neither of the Calderbank offers appeared to have any geographic restriction.[234] Both, but most clearly in the second, sought to prevent Mr O'Shea from commencing work for NPE anywhere in the world. As Mr de Kerloy accepted in relation to the variation application this is not consistent with the words or the proper construction of the Competitor Restraint. To that extent, Mr O'Shea is given significantly greater liberty by the terms of the final injunction than the second Calderbank offer.
[234] See the disjunction, 'or' in the first Calderbank offer.
Secondly, as I explained in my reasons for decision in relation to the interlocutory injunction, Emeco's evidence at that stage did not establish the extent of the customer connection or confidential information 'with any great precision'.[235] At the date of Emeco's first Calderbank offer, Mr O'Shea did not have any of the affidavit evidence which Emeco filed for the trial. Even by the time of the second Calderbank offer, Mr O'Shea did not have any of Emeco's responsive affidavits nor any of its submissions.
[235] Emeco International Pty Ltd v O'Shea [2012] WASC 282 [43].
Thirdly, and related to the second point, in the first Calderbank offer Emeco had stressed to Mr O'Shea the key aspects of confidential information upon which it would rely at trial. Those aspects included Emeco's 'internal financial requirements, including particularly its return on capital requirements'. In my reasons for decision I explained that there were too many intermediate steps between the internal rate of return and a final price which is offered to a potential customer to permit the conclusion that a competitor could meaningfully use the internal rate of return as part of its knowledge of pricing strategy to Emeco's detriment.
As I explained in my primary reasons for decision, restraint of trade cases such as this involve an evaluative judgement which balances the interests of an employer in enforcing a restraint upon the employee's trade with the liberty of the employee. The starting point was that the restraints were unenforceable. It was for Emeco to satisfy me at trial that its interests in confidential information and customer connection were sufficiently strong to justify the enforceability of the restraints. At the time that the Calderbank offers were made Mr O'Shea may have considered that he had reasonable prospects of success. Such a view would not have been unreasonable.
There were several other matters raised by the parties in relation to my exercise of discretion concerning indemnity costs. One further discretionary factor relied upon by Emeco was Mr O'Shea's deliberate failure to disclose evidence concerning the existence of, and terms of, his employment contract with NPE. Emeco said that this failure was unreasonable and misleading; that it required Emeco to incur the costs of a notice to produce, the day after which Mr O'Shea's sworn affidavit annexed his contract of employment with NPE; and caused Emeco to run its case until that point on the basis that Mr O'Shea would be suffering financial hardship if he was prevented from commencing work with NPE.
It is correct that the failure was unreasonable and misleading, and combined with other matters, this had an effect on my findings concerning the credibility of Mr O'Shea's evidence. However, in relation to the trial itself Mr O'Shea did provide a copy of his contract of employment with NPE; the costs of Emeco's notice to produce would have been minimal relative to the remainder of the issues at trial; and there was no evidence that the plaintiff would have run its case differently as a result of this aspect of Mr O'Shea's conduct. In oral submissions, Mr de Kerloy properly did not place any significant weight on this issue.
Emeco also relies upon Mr O'Shea's alleged attitude to the Calderbank offers. It was said that Mr O'Shea had rejected the offers outright and insisted on his right immediately to commence employment with NPE and immediately to solicit the custom of the other clients of Emeco. This mischaracterises the facts. Mr O'Shea's core desire was to work for NPE. He had requested Emeco to inform him of 'terms [Emeco] would agree to allow [Mr O'Shea] to be employed by [NPE] immediately'. He had given substantial undertakings which were aimed at ensuring that he could work for NPE.
Emeco also asserts that due to the indemnity in Mr O'Shea's contract of employment with NPE, he would not suffer any loss by accepting the Calderbank offers and that he was litigating at no risk to himself due to NPE's undertaking to meet his legal costs. However, the effect of the Calderbank offers was to restrict Mr O'Shea's liberty to work in a substantial way. It is, at least, an insubstantial consideration that he would allegedly suffer no loss.
In all the circumstances, this is not a case where the refusal of either Calderbank offer was unreasonable. Indemnity costs must be refused.

The appropriate order for party and party costs

Order 66 r 2(a) of the Rules of the Supreme Court 1971 (WA) provides that in the absence of any special order:
(a)where the statement of claim contains more than one cause of action and the plaintiff succeeds on one or more causes of action and the defendant succeeds on another or others, costs shall be allowed to the plaintiff on the cause or causes of action on which he succeeds and to the defendant on that or those on which he succeeds, in the same manner as if separate actions had been brought.
In Keet v Ward,[236] the Western Australian Court of Appeal in a joint judgment set out four propositions which I reproduce below:
[236] Keet v Ward [2011] WASCA 139 [24].
a)the expression 'cause of action' in O 66 r 2(a) is a reference to a factual situation, the existence of which entitles the plaintiff to obtain a remedy: Letang v Cooper [1964] EWCA Civ 5; [1965] 1 QB 232, 242 (Diplock LJ); Permanent Building Society v Wheeler (No 2) (1993) 10 WAR 569, 572 (Anderson J);
(b)the rule does not provide an inflexible rule which prescribes a mandatory approach to the awarding of costs in cases where there are multiple causes of action. The opening words 'in the absence of any special order' indicate that the court retains the discretion to make a special order departing from the rule in O 66 r 2(a): Kimpura Pty Ltd v JWH Group Pty Ltd [2004] WASCA 134 [12] - [15];
(c)however, where there are multiple causes of action and a party has succeeded on only one or some, the other party is prima facie entitled to costs on the others but the court will always attempt to do substantial justice in the circumstances: Permanent Building Society v Wheeler (No 2), 574 - 575 (Anderson J);
(d)it may not be appropriate to make a costs order in accordance with O 66 r 2(a) where there is in substance one contest, that is, where the causes of action arise from the one course of dealings, the one transaction or the same facts: Permanent Building Society v Wheeler (No 2) (574) - (575); R J Baker Nominees Pty Ltd v Parsons Management Group Pty Ltd [2009] WASC 206(S); Witcombe v Talbot & Olivier [No 2] [2009] WASC 173(S) (Beech J).
There was no dispute before me that the different limbs of the injunction, enforcing different and severable contractual restraints, were separate causes of action. However, it was common ground that this is not a case where it would be appropriate to make a costs order in accordance with O 66 r 2(a). The degree of legal and factual overlap between the issues concerning the Competitor Restraint and the other restraints which were the subject of the injunction application was so substantial that each could not be realistically separated from the other in the assessment of costs.
It was also common ground that the appropriate order was that costs should be awarded in favour of Emeco. The only issue was whether, and to what extent, those costs should be reduced due to the unenforceability of the restraints other than the Competitor Restraint and the failure of Emeco to obtain an injunction in relation to the two restraints other than the Competitor Restraint.
The starting point is the general principle that costs will follow the event. There were three closely related relevant events in this case corresponding with the three restraints. Counsel for Emeco relied heavily upon the decision in Amaca Pty Ltd v Hannell.[237]In that case, the Western Australian Court of Appeal said this:
[237] Amaca Pty Ltd v Hannell [2007] WASCA 158 (S) [7].
[T]he power to adjust an order for costs by reference to particular issues upon which the generally successful party has failed, is properly exercised only where there are discrete and severable issues upon which the generally successful party has failed, and which have added to the cost of the proceedings in a significant and readily discernible way. In a case in which the generally successful party has failed on only a minor issue, which did not add materially to the cost of the conduct of the proceedings, it would not ordinarily be appropriate to depart from the general rule, unless the conduct of the generally successful party in relation to that issue had been unreasonable. In the event of unreasonableness, different considerations may apply.
The same approach may not apply to a situation where the adjustment of the costs order is not by reference to particular issues, but by reference to particular causes of action. In Amaca there was a single cause of action for negligence and the apportionment of costs was sought on the basis that the respondent had succeeded on foreseeability, breach and causation, but not on the issue of duty of care.
After the statement quoted above, the Court of Appeal said that the reason why the court refused to depart from the general rule that costs should be awarded to the successful party was because:
[T]he major part of the time spent at trial was concerned with evidence which spanned all four identified issues, and because it seems to us that it was reasonable for the appellant to put the respondent to the proof of all of the issues necessary to establish their cause of action.
In contrast, in this case the causes of action were discrete and severable even though the substrata of legal and factual issues underlying the three restraints were common. Although, as I explain below, the heart of the trial concerned the Competitor Restraint, and although the correspondence before me shows that Emeco would have been satisfied with an injunction enforcing only the Competitor Restraint (although in different terms from those sought in its Calderbank offers), there was still a reasonable amount of time spent in submissions on the other restraints. The submissions in total occupied a substantial part of one of the two days of hearing.
Initially, Mr O'Shea submitted that Emeco's costs should be reduced by two‑thirds, representing the success on each different restraint. At the oral hearing this morning Mr Neil properly conceded that this may have been ambitious and that a reasonable apportionment might be to reduce Emeco's costs by a third. However, even this reduction is too great. The reason why this reduction is too great is because the essence of this litigation concerned Mr O'Shea's desire to work for NPE without the constraint imposed upon him by the Competitor Restraint.
It is permissible to have regard to the terms of a Calderbank offer in considering the manner in which a discretion should be exercised to order party and party costs.[238]
[238] McKay v Commissioner of Main Roads (No 7) [2011] WASC 223 (S) [68] (Beech J).
In the first Calderbank offer, Emeco did not seek to enforce any of the post‑employment restraints except the Competitor Restraint although the terms of that offer were, as I have explained, expressed in terms different from the Competitor Restraint. In correspondence on 14 August 2012 Emeco's solicitors explained that Emeco 'adopted the view that if [Mr O'Shea] was not working with a competitor, then he would have nothing to offer our client's customers and so any effort to solicit them away from our client would be futile'.
In the second Calderbank offer, Emeco substantially reduced the period for which it said that Mr O'Shea should not work for NPE but the offer of this reduction was accompanied by terms that the other restrictions remain on foot.
For Mr O'Shea's part, he was also essentially motivated by the desire to work for NPE. He offered substantial undertakings related to the other restraints and, as I have explained, he requested that Emeco inform him of the terms that Emeco would agree to allow him to be employed by NPE.
In all of the circumstances of this case I consider that Emeco should be entitled to 90% of its costs, assessed on a party and party basis.