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Employsure Pty Ltd v McMurchy

Employsure Pty Ltd v McMurchy

Case [2021] NSWSC 139 24 February 2021

Employment & Labour Law

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Supreme Court

New South Wales

Medium Neutral Citation: Employsure Pty Ltd v McMurchy [2021] NSWSC 139
Hearing dates: 5, 8 February 2021
Date of orders: 8 February 2021
Decision date: 24 February 2021
Jurisdiction: Equity - Duty List
Before: Parker J
Decision:
See [73]

Catchwords:
EMPLOYMENT LAW – contract – interlocutory restraint of trade – employee restrained from working elsewhere during “employment” by employer – employee purports to terminate employment claiming 28 day notice period and then leaves after 28 days – prima facie case – contract provides for three month notice period – subsequent variation refers to earlier contract containing 28 day notice period – construction principle in Fitzgerald v Masters – whether “employment” continues after employment relationship ceases – whether employee’s notice of termination was wholly ineffective or effective after three months – injunction granted against employment with new employer for three months from date of employee’s notice

Legislation Cited:
Uniform Civil Procedure Rules 2005 (NSW), r 36.1

Cases Cited:
Automatic Fire Sprinklers v Watson (1946) 72 CLR 435
Burton Group Ltd v Smith [1977] IRLR 351
Fardell v Coates Hire Operations Pty Ltd [2010] NSWSC 346
Fitzgerald v Masters (1956) 95 CLR 420
Graham Barclay Oysters Pty Ltd v Ryan (2002) 211 CLR 540
Gunton v Richmond-upon-Thames London Borough Council [1981] Ch 448
Hitech Contracting Ltd v Lynn (Supreme Court (NSW), Austin J, 5 June 2001, unrep)
Kolback Securities Ltd v Epoch Mining NL (1987) 8 NSWLR 533
Mannai Investment Co Ltd v Eagle Star Life Assurance Co Ltd [1997] AC 749
Morton Suntour Fabrics v Shaw (1967) 2 ITR 84
Pittmore Pty Ltd v Chan [2020] NSWCA 344
Purcell v TullettPrebon (Aust) Pty Ltd [2010] NSWCA 150
TullettPrebon (Australia) Pty Ltd v Purcell (2008) 175 IR 414
Warramunda Village Inc v Pryde (2001) 105 FCR 437

Texts Cited:
GJ McCarry, “Termination of Employment Contracts by Notice” (1986) 60 Australian Law Journal 78
Mark Irving, The Contract of Employment (LexisNexis Butterworths Australia, 2012)

Category: Procedural rulings
Parties: Employsure Pty Limited (Applicant/Plaintiff)
David McMurchy (First Respondent/Defendant)
ELMO Software Limited (Second Respondent/Defendant)
Representation:
Counsel:
P Moorhouse (Applicant)
P Lowson (Respondents)
Solicitors:
Kardas Scanlan (Applicant)
Mills Oakley (Respondents)

File Number(s): 2021/16210
Publication restriction: Nil

Judgment

In this judgment I set out my reasons for interlocutory orders I made on Monday 8 February. The orders were made on the application of a former employer who is seeking to prevent its former employee from working for his new employer, or limiting the work he can perform in his new employment.
Employsure Pty Limited (“Employsure”), the plaintiff, carries on business as a provider of human resources and workplace health and safety services to employers. It operates throughout Australia and New Zealand and focuses on the small and medium enterprise (“SME”) market. Employsure conducts a subscription business. Its customers subscribe for its basic services and may also purchase additional products and services which complement those basic services.
David McMurchy, the first defendant, worked for Employsure from May 2015 until January this year.…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Employsure Pty Ltd v McMurchy

Details

AGLC: Employsure Pty Ltd v McMurchy [2021] NSWSC 139
Case: [2021] NSWSC 139
Decision Date: 24 February 2021

CaseChat Overview and Summary

In this case, the respondent, McMurchy, was employed by the applicant, Employsure, pursuant to a contract of employment. McMurchy purported to terminate his employment by providing a 28-day notice of termination, which he then left after 28 days. However, the contract stipulated a three-month notice period. The court was tasked with determining whether the employee's notice of termination was wholly ineffective or if it was effective after three months. The case hinged on the interpretation of the contract and the relevant principles of contract law.

The primary legal issue was whether the contract's notice period of three months was the one that applied, or whether the subsequent variation of the contract referring to the earlier contract with a 28-day notice period should prevail. The court applied the principle from Fitzgerald v Masters to ascertain whether the employment relationship continued even after the employee purported to terminate it. The court also needed to determine whether the notice of termination was wholly ineffective or effective after the three-month period.

The court concluded that the contract's three-month notice period applied, not the 28-day notice period mentioned in the earlier contract. The court found that the employee's notice of termination was not wholly ineffective, but rather, it was effective after three months. The court held that the employment relationship continued even after the employee purported to terminate it. Consequently, the court granted an injunction against the employee working with a new employer for three months from the date of the employee's notice of termination.

The court's final order was to grant an injunction restraining the employee from working with a new employer for three months from the date of the employee's notice of termination. The court's decision highlighted the importance of correctly interpreting the terms of a contract and applying the relevant principles of contract law.

Orders