Employsure Ltd v McMurchy

Case [2021] NSWSC 1179


Supreme Court


New South Wales

Medium Neutral Citation: Employsure Ltd v McMurchy; Employsure Ltd v Kumaran [2021] NSWSC 1179
Hearing dates: 12, 13, 14 & 19 April, 9 & 10 June 2021
Submissions of the Plaintiff dated 9 April & 3 June 2021
Confidential submissions of the Plaintiff dated 3 June 2021
Submissions of the Defendants dated 12 April, 3 & 9 June 2021
Confidential submissions of the Defendants dated 9 June 2021
Decision date: 17 September 2021
Jurisdiction:Equity - Expedition List
Before: Sackar J
Decision:

See [424]-[435]

Catchwords:

CONTRACTS — Construction — Whether letters of variation had the effect of reinstating a previous version of an employment contract

CONTRACTS — Rectification — Intention — Discerning the parties’ intention to correct an absurdity in an employment contract — Where reference in letter of variation to a previous version of an employment contract was an obvious error

CONTRACTS — Construction — Whether the employee’s contract of employment was terminated after he had given notice less than was contractually required or after his employer had given notice

CONTRACTS — Breach of contract — Whether former employee breached non-solicitation clause by aiding recruitment of another employee with competitor

EMPLOYMENT AND INDUSTRIAL LAW — Contract — Restraint of Trade — Whether restraint operates because parties are “in competition”

EMPLOYMENT AND INDUSTRIAL LAW — Contract — Restraint of Trade — Validity and reasonableness — Restraints of Trade Act 1976 (NSW) — Legitimate interests — Confidential Information — Length and scope of restraint

EQUITY — Fiduciary duties — Fiduciary relationships — Employee and employer — Whether former employee breached fiduciary duties by taking up employment with a competitor while still employed by original employer

TORTS — Economic torts — Inducing breach of contract

Legislation Cited:

Restraints of Trade Act 1976 (NSW)

Cases Cited:

Adamson v New South Wales Rugby League Limited (1981) 27 FCR 535; [1991] FCA 8

Agha v Devine Real Estate Concord Pty Ltd [2021] NSWCA 29

Allstate Life Insurance Co v Australia and New Zealand Banking Group Ltd (1995) 58 FCR 26; [1995] FCA 481

Automatic Fire Sprinklers v Watson (1946) 72 CLR 435

BearingPoint Australia Pty Ltd v Hillard [2008] VSC 115

Belflora Pty Ltd v Vinflora Pty Ltd [2021] NSWCA 178

BGC Partners (Australia) Pty Limited v Hickey (2016) 259 IR 318; [2016] NSWSC 90

Blyth Chemicals Ltd v Bushnell (1933) 49 CLR 66; [1933] HCA 8

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

Concut Pty Ltd v Worrell (2000) 75 ALJR 312; [2000] HCA 64

Cordon Investments Pty Ltd v Lesdor Properties Pty Ltd [2012] NSWCA 184

De L’Isle v Knight [2021] NSWSC 809

DP World Sydney Ltd v Guy (2016) 262 IR 156; [2016] NSWSC 1072

Electricity Generation Corporation v Woodside Energy Ltd [2014] HCA 7; (2014) 251 CLR 640; [2014] HCA 7

Emeco International Pty Ltd v O’Shea (No 2) (2012) 225 IR 423; [2012] WASC 348

Employsure Pty Ltd v…

Continue reading Employsure Ltd v McMurchy

Sign in free to access the full text

Details
AGLC
Employsure Ltd v McMurchy [2021] NSWSC 1179
Case
[2021] NSWSC 1179
Decision Date

CaseChat Overview and Summary

In the case of Employsure Ltd v McMurchy, the respondent, Mr McMurchy, had been employed by the appellant, Employsure Ltd, under an employment contract which included a non-solicitation clause. After giving notice of termination, Mr McMurchy commenced employment with a competitor. Employsure Ltd sought relief for the alleged breach of the non-solicitation clause, inducement of breach of contract, and fiduciary duty breaches. The case was heard in the Supreme Court of New South Wales.

The primary legal issues the court needed to address included whether the letters of variation served by the employer had the effect of reinstating an earlier version of the employment contract, the intention behind the parties' agreement to correct an obvious error in the contract, and the validity of the non-solicitation clause. The court also had to determine whether the employer had terminated the contract in a manner consistent with the contract terms, and if Mr McMurchy had breached his non-solicitation clause by aiding the recruitment of another employee with a competitor.

The court found that the letters of variation did not have the effect of reinstating the previous version of the employment contract, as the reference to the earlier version was an obvious error. The court discerned the intention of the parties to correct this error and held that the non-solicitation clause was valid and enforceable. It was determined that the employer had not terminated the contract properly, but Mr McMurchy had breached the non-solicitation clause by assisting in the recruitment of another employee with a competitor. The court also found that Mr McMurchy had breached his fiduciary duties by taking up employment with a competitor while still employed by Employsure Ltd, and that he had induced breach of contract.

The final orders of the court included a declaration that Mr McMurchy had breached his non-solicitation clause and fiduciary duties, an injunction restraining him from competing with Employsure Ltd, and an order for damages to be assessed. The court also ordered that the non-solicitation clause and other restraints in the contract were valid and enforceable, subject to the provisions of the Restraints of Trade Act 1976 (NSW).

Orders

Orders of the court

Full text does not contain this section.

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

Full text does not contain this section.

Ratio Decidendi

Legal Principle Established

Full text does not contain this section.