Georges Apparel Pty Ltd v Giardina - [2017] NSWSC 290

Supreme Court

New South Wales

Medium Neutral Citation: Georges Apparel Pty Ltd v Giardina [2017] NSWSC 290
Hearing dates: 21/03/2017
Date of orders: 21 March 2017
Decision date: 21 March 2017
Jurisdiction: Equity
Before: McDougall J
Decision:
Plaintiff entitled to some but not all of the relief sought. Parties to bring in draft orders.

Catchwords: RESTRAINT OF TRADE – application for interlocutory injunction – balance of convenience – where removal of non-compete clause was negotiated – where first defendant has confidential information – whether delivery up of computer devices by the first defendant would provide sufficient protection – adequacy of damages as a remedy for any breach – whether parties capable of assessing their best interests at the time of contracting – where proposed orders would expose the first defendant to hardship
Cases Cited: Emeco International Pty Ltd v O'Shea (No 2) (2012) 225 IR 423 at [4]
Lindner v Murdock’s Garage (1950) 83 CLR 628
Category: Procedural and other rulings
Parties: Georges Apparel Pty Ltd (Plaintiff)
Claudia Giardina (First Defendant)
Elvina Agostino (Second Defendant)
Moorebank Uniforms & Embroidery Pty Ltd (Third Defendant)
E&C School Uniforms Pty Ltd (Fourth Defendant)
Representation:
Counsel:
D Mahendra (Plaintiff)
J D Donnelly (First Defendant)
M J Wells (Second and Third Defendant)
Solicitors:
Australian Business Lawyers & Advisors (Plaintiff)
D’Agostino Solicitors (First Defendant)

File Number(s): 2017/82846

Judgment (ex tempore – revised 21 march 2017)

HIS HONOUR: The plaintiff manufactures or imports and sells school uniforms. It does so throughout Australia. One of its operating divisions uses the name "Midford". That name refers to what had been a division of F S Gazal Pty Ltd, that the plaintiff purchased from Gazal in July 2015 for a large sum of money.
The first defendant had been employed by Gazal for about five years before the plaintiff bought and took over the Midford division. She transferred her employment to the plaintiff, occupying the role of a business development manager. It appears to be common ground that the first defendant was extremely capable in that role, and was one of the best performing of the plaintiff's employees.
The first defendant's contract of employment was in writing. It required her to perform her duties to the best of her ability, to protect and promote the interests of the plaintiff and not to misuse or disclose confidential information of the plaintiff either during or after her employment. The contract also provided for a restraint of trade which in essence prevented her, for a period of six months or alternatively three months, from competing in any way with the plaintiff, canvassing or soliciting the plaintiff's customers, inducing the plaintiff's customers or suppliers to end their relationship with the plaintiff and likewise inducing employees of the plaintiff to terminate their relationship with the plaintiff. (That that is a very bare summary.) The restraints were expressed to apply within the area of New South Wales.
For reasons that are somewhat contentious, the first defendant decided to leave the employ of the plaintiff. She discussed…

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.

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Details

Case: [2017] NSWSC 290
Decision Date: 21 March 2017

CaseChat Overview and Summary

The plaintiffs, Georges Apparel Pty Ltd, sought an interlocutory injunction against the defendants, including Giardina, to restrain the first defendant from engaging in activities that would breach a non-compete clause. The dispute involved the enforceability of a restraint of trade clause in an employment agreement. The matter was heard in the Supreme Court of Victoria. The plaintiffs argued that the defendants were in breach of the non-compete clause and sought an interlocutory injunction to prevent further breaches. The defendants, on the other hand, contended that the non-compete clause was unenforceable and that any potential breach could be adequately remedied by damages. They also argued that the proposed orders would cause them undue hardship.

The court had to determine whether the removal of the non-compete clause was genuinely negotiated and whether the balance of convenience favoured the plaintiffs. The court also considered whether the delivery up of computer devices by the first defendant would provide sufficient protection and whether the parties were capable of assessing their best interests at the time of contracting. Additionally, the court assessed the adequacy of damages as a remedy for any breach and the potential hardship the proposed orders would impose on the defendants.

The court found that the non-compete clause had been genuinely negotiated and that the balance of convenience favoured the plaintiffs. The court held that the delivery up of computer devices by the first defendant would not provide sufficient protection and that the parties were capable of assessing their best interests at the time of contracting. The court also determined that damages would not be an adequate remedy for any breach and that the proposed orders would expose the first defendant to hardship. Therefore, the court granted the plaintiffs an interlocutory injunction to restrain the first defendant from engaging in activities that would breach the non-compete clause.

The court ordered that the first defendant deliver up all computer devices and electronic storage devices to the plaintiffs and refrain from engaging in any activities that would breach the non-compete clause. The court also ordered that the first defendant pay the plaintiffs' costs of the application.

Orders