Hannamax Hi-Tech Pty Ltd v O'Donnell - [2001] NSWSC 634

CITATION: Hannamax Hi-Tech Pty Ltd v. Lynne O'Donnell [2001] NSWSC 634

CURRENT JURISDICTION:
Equity

FILE NUMBER(S): SC 3473/01

HEARING DATE(S): 20 July, 2001 - Ex tempore

JUDGMENT DATE:
20 July 2001

PARTIES :

Hannamax Hi-Tech Pty Limited (Plaintiff)
Lynne O'Donnell (Defendant)

JUDGMENT OF: Palmer J

COUNSEL : P.C. Coleman (Plaintiff)
D.P. Robinson (Defendant)

SOLICITORS: Carroll & Associates (Plaintiff)
Holding Redlich (Defendant)

CATCHWORDS: EMPLOYMENT LAW - Contract of service - application for interlocutory injunction to restrain the defendant from obtaining or commencing employment with a competitor of the plaintiff - application for interlocutory mandatory injunction that the defendant terminate current employment with a competitor - contract of employment includes terms providing for the non-disclosure of confidential information - not sufficient evidence of confidential information in the possession of the defendant to warrant an injunction. TRADE AND COMMERCE - Restraint of trade - appication for interlocutory injunction to restrain the defendant from obtaining or commencing employment with a competitor of the plaintiff - application for interlocutory mandatory injunction that the defendant terminate current employment with a competitor - breach of covenant against competition by the defendant - serious question to be tried as to whether the covenant against competition is enforceable - balance of convenience - injunction should be refused in light of an undertaking given by the defendant not to approach certain customers of the plaintiff.

LEGISLATION CITED: Restraints of Trade Act, 1976

CASES CITED: - Kone Elevators Pty Ltd v. McNay and Anor (1997) 19 ATPR 41-564
- Littlewood's Organisation Limited v. Harris [1977] 1 WLR 1472

DECISION: Dismiss the applications. Plaintiff to pay the Defendant's costs.

1 This is an application for an injunction restraining the defendant, pending the final determination of these proceedings, from obtaining or commencing employment with Eyrtel Australia Pty Ltd, or from obtaining employment with any competitor of the plaintiff in the manufacture or distribution of telecommunications logging equipment. 2 An interlocutory injunction is also sought requiring the defendant to terminate forthwith her present employment with Eyrtel. 3 The plaintiff carries on business as a distributor of multi-channel channel digital recording equipment known as "logging" equipment. There is a niche market for that equipment. The market is part of the wider telecommunications industry. 4 According to the evidence so far adduced, the logging equipment market constitutes between 1% and 3% of the overall telecommunications market. The logging equipment market is intensely competitive. 5 The defendant commenced employment with the plaintiff on 9 October 2000. She was engaged as an Account Manager to perform the following duties. She was required to visit potential clients by following leads and giving product presentations. She was required to promote the systems distributed by the plaintiff in order to win sales. She was required to manage the current and future needs and demands of existing clients and to work with an organisation called Channel Partners, who are partners of the plaintiff in the telecommunications industry. 6 Prior to commencing employment with the plaintiff, the defendant had been engaged in…

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: [2001] NSWSC 634
Decision Date: 20 July 2001

CaseChat Overview and Summary

Hannamax Hi-Tech Pty Ltd brought an action against O'Donnell, seeking an interlocutory injunction to restrain O'Donnell from obtaining or commencing employment with a competitor of Hannamax Hi-Tech, as well as an interlocutory mandatory injunction that O'Donnell terminate his current employment with a competitor. The dispute arose from a contract of employment between the parties that included terms providing for the non-disclosure of confidential information. The case was heard in the Supreme Court of New South Wales.

The court had to decide whether there was sufficient evidence of confidential information in O'Donnell's possession to warrant an interlocutory injunction. Additionally, the court needed to determine if a breach of the covenant against competition was present and if the covenant was enforceable. The court also had to weigh the balance of convenience, considering that O'Donnell had given an undertaking not to approach certain customers of Hannamax Hi-Tech.

The court found that there was not enough evidence of confidential information in O'Donnell's possession to warrant an injunction. Furthermore, the court determined that there was a serious question to be tried as to whether the covenant against competition was enforceable. In light of the undertaking given by O'Donnell, the court decided that the balance of convenience favoured denying the injunction. Therefore, the application for an interlocutory mandatory injunction was refused.

The final orders included a refusal of the interlocutory mandatory injunction and a refusal of the interlocutory injunction to restrain O'Donnell from obtaining or commencing employment with a competitor of Hannamax Hi-Tech.

Orders