Hamilton James Bruce Pty Ltd v Sarah Mann
[2002] VSC 252
•14 June 2002
| IN THE SUPREME COURT OF VICTORIA | Not Restricted | |
AT MELBOURNE
PRACTICE COURT
No. 5896 of 2002
| HAMILTON JAMES BRUCE PTY LTD | Plaintiff |
| v | |
| SARAH MANN | Defendant |
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JUDGE: | Bongiorno J | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 14 June 2002 | |
DATE OF JUDGMENT: | 14 June 2002 | |
CASE MAY BE CITED AS: | Hamilton James Bruce Pty Ltd v Sarah Mann | |
MEDIUM NEUTRAL CITATION: | [2002] VSC 252 | |
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr J McDougall | Phillips Fox |
| For the Defendant | Mr M McDonald | Maddocks |
HIS HONOUR:
By a writ issued out of this court on 6 June 2002, Hamilton James Bruce Pty Ltd seeks equitable relief against Sarah Mann, in the nature of a declaration concerning a contract allegedly entered into between the plaintiff and the defendant on 20 August 2001. The declaration sought is to the effect that the restraint provisions in Cl. 9.2 of that contract are valid and binding on the defendant until 19 December 2002. The plaintiff also seeks, by summons dated 7 June, interlocutory relief by way of injunction restraining the defendant from engaging in certain activities which the plaintiff says are prohibited by the contract, and, in particular, by Cl. 9.2 of the contract.
In essence, the plaintiff, which is a company which provides temporary and permanent employees to other businesses, says that the defendant who has left its employment is likely, unless restrained, to use knowledge gained in her employment to enable her to entice customers, and perhaps even employees, of the plaintiff to the new business in which she is now employed and in which it is said she has some interest.
The precipitating event which the defendant says caused her to leave the employ of the plaintiff is, she alleges, a repudiation by the plaintiff of her contract of employment. The plaintiff, so the defendant says, threatened to reduce her income in a way that was inconsistent with the maintenance of that contract, thereby entitling the defendant to treat the contract as at an end, thus relieving her of any obligation so far as Cl. 9.2 is concerned.
That issue, that is to say the justification the defendant had for leaving her employment, will fall to be determined upon a trial, I suspect, upon a large body of evidence. Whether there was or was not a repudiation will be a matter which will be hotly in contention.
It is sufficient for present purposes to say that on that issue there is a serious question to be tried. On one view, the actions of the plaintiff in asserting to the defendant that her income would be reduced by even the small amount conceded by it may have given her an entitlement to treat the contract as at an end. A fortiori, if in fact the reduction was to be as great as the defendant calculated it, there would be even more justification for her regarding the contract as repudiated. That means that part of the foundation for interlocutory relief has been laid, that is to say there is an undetermined serious issue which still has to be tried and which goes to the heart of the action.
The second part of the burden the plaintiff must discharge in order to obtain interlocutory relief is to demonstrate that on the balance of convenience it is more appropriate that the defendant be restrained than that she not be restrained.
The restraint of trade clause which it is sought to enforce by this proceeding is due to run for about another five or six months. It is over that period that the interlocutory injunction is sought. But, of course, if an interlocutory injunction goes, the plaintiff will have, in effect, won the action. There will be little point in litigating it after the effluxion of the restraint period. Any relief granted would be of no use to the plaintiff as the defendant would have ceased to be bound by Cl. 9.2. As the price of the injunction, of course, the plaintiff would have to offer to the Court an undertaking as to damages, meaning that if ultimately it was determined that the plaintiff was not correct in its assertion that the defendant was not entitled to act contrary to Cl. 9.2, then the defendant would be entitled to damages upon calling up that undertaking. The other side of the coin is that if the plaintiff does not get its interlocutory injunction and the defendant persists in what the plaintiff says she is presently doing, and ultimately the plaintiff is successful, then it will be the defendant who will be mulcted in damages for breaching Cl. 9.2. That is, of course, if Cl. 9.2 is a valid contractual term, having regard to the arguments put by Mr McDonald as to its unreasonableness.
In the end, it seems to me that there is a very fine balance between the two situations. Does the plaintiff get its interlocutory injunction, give its undertaking as to damages and be at risk of that undertaking being called up in the event that it is later proved wrong; or does it not get its interlocutory injunction and, if it is later proved correct, then get an award of damages against the defendant?
A number of arguments have been advanced by Mr McDougall for the plaintiff as to why the balance of convenience is in his client's favour. He points to the fact that the calculation of damages would contain elements which are incalculable. That is so, I suppose, in almost every damages claim, but it does not mean that the courts cannot calculate them, and in this instance, where Cl. 9.2 is framed in such a way as to relate to employees and customers, the loss of either by the plaintiff would place it in a head start position so far as proving damages were concerned. The proof of a breach of Cl. 9.2 might be further enhanced if discovery determined that those employees or customers were now placed with the company in which the defendant has an interest or by which she is employed. So I put to one side the question of the incalculability of the damages. Of perhaps greater moment is what Mr McDougall referred to as the springboard effect; that is, the advantage of the defendant being placed in a position of being able to deal with valuable clients. But, of course, she can do that in any event without breaching Cl. 9.2 provided that she does not engage in the active enticement of those clients away from the present plaintiff.
In the end, I regard the situation as finely balanced. Being finely balanced, it is the plaintiff who must yield. The defendant is entitled to have a case proved against her, and, if it is finely balanced, even on a question of law, then that balance must weigh in her favour and against that of the plaintiff.
Accordingly, I refuse the application for interlocutory relief. The summons will be dismissed.
The plaintiff having been unsuccessful in its application, it must bear the costs. There will be a further order that the plaintiff pay the defendant's costs to be taxed.
The summons will be dismissed. Order that the plaintiff pay the defendant's costs of the summons. I will order that the plaintiff deliver any amended statement of claim upon which it seeks to rely within seven days of today, that is, by 21 June 2002; that the defendant have 21 days after service of that statement of claim to deliver its defence to it; that all other directions at the moment be according to the Rules. I will further order that this order be drawn up by the solicitors for the defendant and signed by a judge.
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CERTIFICATE
I certify that this and the 3 preceding pages are a true copy of the reasons for Judgment of The Hon. Justice Bongiorno of the Supreme Court of Victoria delivered on 14 June 2002.
DATED this twenty-fourth day of June 2002.
Associate
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