Gibney & Gunson Inc v Stewart

[2009] NSWSC 855

CITATION:	Gibney & Gunson Inc v Stewart [2009] NSWSC 855
HEARING DATE(S):	13 August 2009
JURISDICTION:	Equity
JUDGMENT OF:	Hamilton AJ
EX TEMPORE JUDGMENT DATE:	13 August 2009
DECISION:	Interlocutory injunction granted
CATCHWORDS:	TRADE AND COMMERCE [28] – Trade and commerce generally – Restraint of trade – Restraint by agreement – Enforcement of agreement – Remedies for breach of agreement – Right to injunction – Interlocutory injunction – Agreement not to act for former clients or customers.
LEGISLATION CITED:	Restraint of Trade Act 1976, s 4(3)
CATEGORY:	Procedural and other rulings
CASES CITED:	Australian Broadcasting Corporation v O’Neill (2006) 227 CLR 57 Cerilian Pty Ltd v Graham Fraser [2008] NSWSC 1016 IceTV v Duncan Ross [2007] NSWSC 635 Kolback Securities Limited v Epoch Mining NL (1987) 8 NSWLR 533 Koops Martin v Dean Reeves [2006] NSWSC 449 Otis Elevator Co Pty Ltd v Nolan [2007] NSWSC 593
PARTIES:	Gibney & Gunson Inc (plaintiff) Peta Nicole Stewart (defendant)
FILE NUMBER(S):	SC 4030/09
COUNSEL:	G R Waugh D J Jenkins
SOLICITORS:	Mr D Norquay (plaintiff) McGlynn & Partners (defendant)

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
DUTY LIST

HAMILTON AJ

Thursday, 13 August 2009

4030/09 Gibney & Gunson Inc v Peta Stewart

JUDGMENT (ex tempore)

1 HIS HONOUR: This is an application for an interlocutory injunction in proceedings between the plaintiff, which is a corporation that conducts a solicitors’ practice in Laverton, a suburb of Albury, and the defendant, who was formerly employed by the plaintiff as a conveyancer.

2 The defendant entered the plaintiff’s employ in 2004 and left it on 24 March 2009 after being informed that her salary and her support services were to be reduced.

3 The agreement under which she initially entered into employment contained a clause imposing post termination competition restrictions that included a provision that she would not after the termination of employment:

solicit, canvass or in any way whatsoever seek the custom of or act for directly or indirectly any of the customers or clients of the Company whether on behalf of themself [ sic ] or for any other party as an Employee otherwise whether directly or indirectly.

In that agreement there was no restriction as to the time of the restraint.

4 At about the time of the termination of her employment, on 26 March 2009, the defendant executed a further deed containing a clause 4(b) in terms substantially the same as the original clause 25 deed. However, in the deed the restrictions were limited to a period of two years following termination of employment.

5 While she was employed by the plaintiff the defendant did a great deal of the plaintiff’s conveyancing work. In particular, she did a great deal of work for clients called Peter Bowen Homes Pty Ltd, Peter Bowen and Jayne Bowen, who were engaged in property development (“the Peter Bowen interests”).

6 After leaving the plaintiff’s employ (although she denies that she had had any such idea before that time) the defendant set up a conveyancing firm in Albury. In April 2009 there was correspondence from which it appears that it had reached the plaintiff’s ears that the defendant might be soliciting the Peter Bowen interests to be clients of her new firm. However, nothing further eventuated until the plaintiff learnt shortly after 22 June 2009 that the defendant was in fact acting for the Peter Bowen interests.

7 On 8 July 2009 the plaintiff had a solicitor write to the defendant demanding an undertaking not to act on behalf of the Peter Bowen interests and threatening proceedings for injunctive relief if the undertaking was not given. The undertaking was not given and, by summons filed on 7 August 2009, the plaintiff commenced the present proceedings.

8 The plaintiff now seeks interlocutory relief restraining the defendant from acting for the Peter Bowen interests or other customers or clients of the plaintiff until the determination of these proceedings.

9 The principles relating to the grant of interlocutory injunctions are set out in the well-known passages in Kolback Securities Limited v Epoch Mining NL (1987) 8 NSWLR 533 at 535-536 per McLelland J. See also Australian Broadcasting Corporation v O’Neill (2006) 227 CLR 57 at [65]-[72] and IceTV v Duncan Ross [2007] NSWSC 635 at [9]-[10].

10 Mr Jenkins on behalf of the defendant has submitted that this is a case in the category referred to by McLelland J where a firm determination must be made about the strength of the plaintiff’s substantive case because the decision of the interlocutory application will in a practical way be determinative of the proceedings. See per Brereton J in Otis Elevator Co Pty Ltd v Nolan [2007] NSWSC 593 at [7].

11 However, this is a case quite different in its time tolerances from Otis Elevator. There the proceedings could hardly be determined before the expiry of the period of the restriction. Here the restriction if upheld will potentially last until 24 March 2011. In view of the regime maintained in this Division of this Court for the expeditious determination of proceedings, I can see no reason why the proceedings should not be determined some time this year, leaving a considerable time period for the operation of the restriction.

12 So far as the existence of a seriously arguable case for a final injunction is concerned, the defendant has contended that the plaintiff cannot succeed under the second agreement because that was obtained by the exercise of economic duress. It cannot succeed, it is said, under the first agreement because the restriction in that agreement is unreasonable because of the lack of limitations of time and area.

13 So far as the second of these is concerned, the defendant probably has an arguable case concerning the obtaining of the second agreement by economic duress. However, in my view the existence of that contention does not destroy a substantial seriously arguable case for a final injunction based on that agreement.

14 The defendant then says that the plaintiff must fail on the first agreement because of the lack of restrictions in time and area. However, that ignores the provisions of the Restraint of Trade Act 1976, under s 4(3) of which the Court could enforce the restraint for what it regards as a reasonable period and the plaintiff intends to press the Court to do so, if it is held that it does not have the benefit of the second agreement. So far as area is concerned, in my view the area is practically limited by the fact that all of the plaintiff, the defendant and the clientele is in Albury; and see per Brereton J in Koops Martin v Dean Reeves [2006] NSWSC 449 at [86].

15 The defendant has also raised issues of ambiguity of the expression “clients or customers” in both agreements. Whilst it may be that there are available arguments relating to ambiguity, again, I do not think that this prevents the plaintiff having a substantial seriously arguable case for a final injunction.

16 The situation arising from the fact that there may be different ways in which the relevant clients and customers may be defined is dealt with by the plaintiff limiting the clients and customers in respect of which it seeks relief to clients and customers who were serviced by the defendant during the last 12 months of employment.

17 In my view, therefore, the plaintiff does have a substantial seriously arguable case for injunctive relief in the final proceedings.

18 I turn then to the balance of convenience. The plaintiff has assisted in that regard by limiting the restraint it seeks not only in the fashion that I have already indicated, but by excepting from the ambit of the injunction such of the matters of the Peter Bowen interests as the defendant is already engaged on. It has also excepted persons named in the defendant’s evidence as being persons among the clients or customers who are relations or close friends of the defendant.

19 The central consideration on the balance of convenience appears to me to arise from the likely harm to be done to the defendant by the grant of injunctive relief and to be done to the plaintiff if injunctive relief be denied. The defendant has set out in her evidence matters of the Peter Bowen interests in which she is acting. She has not set out in her evidence any material that showed the names or the numbers of the clients that she is acting for in her present practice. Although I realise economic times are difficult, she has not led evidence to show that she could not obtain employment as a conveyancer or with some other firm in the Albury / Wodonga district where she could do work of clients clearly not in any way associated with the plaintiff. This leaves aside the question of whether or not employment would be available to her elsewhere than in that Albury / Wodonga area and whether it would be reasonable to require her to seek such work.

20 What flows from all this is that there is no basis for a finding that she will be deprived of the means of ordinary living if an injunction is granted in the terms now sought, either from her present practice or in other ways. The situation is quite different from that dealt with by Brereton J in Otis Elevator supra at [36].

21 On the other hand, it seems to me that it will be a very serious matter for the plaintiff if it is left in a situation where the defendant can entice or act for others of its clients with whom the defendant had an association whilst employed by the plaintiff, thereby detracting from their established practice.

22 In those circumstances it seems to me that the balance of convenience on the evidence before me substantially favours the plaintiff. The conclusion I have come to, weighing up together all the relevant matters, is that injunctive relief should be granted substantially on the terms in which the plaintiff now asks for it.

23 There are other matters I should say something about. It was put to me that the plaintiff should be deprived of interlocutory relief because of its delay in applying for that relief.

24 Although, as I have said, some fears were expressed on behalf of the plaintiff in April 2009, no firm evidence that the defendant was enticing or acting for the plaintiff’s clients came to the plaintiff’s attention until about 22 June 2009. By 8 July 2009 it had instructed its solicitor to write the letter I have already mentioned. The proceedings were commenced some four weeks after that.

25 The defendant’s argument concerning delay is not without some substance. In Cerilian Pty Ltd v Graham Fraser [2008] NSWSC 1016 Brereton J declined some interlocutory relief where there had been a delay of only a few days in seeking that relief. However, I do not for a moment believe that his Honour intended to lay down a principle that relief could not be granted unless sought within a few days of knowledge and, furthermore, there was a particular significance in the delay in that case.

26 The plaintiff in this case was not as speedy as it might have been but, in all the circumstances of this case, I have taken the view that it should not be precluded by any delay from obtaining interlocutory relief.

27 I shall place the matter in Palmer J’s Expedition List tomorrow 14 August 2009 so that the expedition of the proceedings can be set in train as speedily as possible.

(Counsel addressed on the orders to be made and the question of costs. Mr Waugh gave to the Court on behalf of his client the usual undertaking as to damages and an undertaking as to the speedy conduct of the proceedings).

28 The order as to costs will be that the plaintiff’s costs of the application will be the plaintiff’s costs in the proceedings.

**********