Harrier Group Pty Ltd v Reynolds

[2021] WASC 174

JURISDICTION     :   SUPREME COURT OF WESTERN AUSTRALIA

IN CHAMBERS

CITATION:   HARRIER GROUP PTY LTD -v- REYNOLDS [2021] WASC 174

CORAM:   MASTER SANDERSON

HEARD:   5 MAY 2021

DELIVERED          :   2 JUNE 2021

PUBLISHED           :   2 JUNE 2021

FILE NO/S:   CIV 2266 of 2020

BETWEEN:   HARRIER GROUP PTY LTD

Plaintiff

AND

KELLY REYNOLDS

Defendant

Catchwords:

Discovery - application by plaintiff for pre-action discovery - Turns on own facts

Legislation:

Rules of Supreme Court 1971 (WA)

Result:

Application dismissed

Category:    B

Representation:

Counsel:

Plaintiff	:	C Hood
Defendant	:	M Saraceni

Solicitors:

Plaintiff	:	HWL Ebsworth Lawyers (Perth)
Defendant	:	Brand Barristers & Solicitors

Case(s) referred to in decision(s):

BWS v ARV [No 2] [2021] WASCA 62

MASTER SANDERSON:

1. By originating summons filed 24 December 2020, the plaintiff sought pre‑action discovery from the defendant. The application was brought under O 26A r 4 of the Rules of the Supreme Court 1971 (WA) (RSC). There was no dispute between the parties as to the relevant principles. The plaintiff must establish that it:

   (a)may have a cause of action against the potential party;

   (b)wants to commence proceedings against the potential party;

   (c)after reasonable enquiries, has not been able obtain sufficient information to enable a decision to be made as to whether to commence proceedings;

   (d)there are reasonable grounds for believing that the potential party had, has, or is likely to have, had, or to have, possession of documents that may assist in making the decision whether to commence proceedings; and

   (e)the potential cause of action is against a person whose description has been ascertained.

2. The application must be supported by an affidavit which is served on the potential party.  In this case, the plaintiff relied on an affidavit of David Sourbutts affirmed 21 December 2020 as supplemented by a further affidavit of Mr  Sourbutts affirmed 15 April 2021.  Mr Sourbutts is the chair of the board of the plaintiff.  In response, the defendant relied upon her affidavit affirmed 12 March 2021. 

3. The relevant background facts can be shortly summarised.  The plaintiff is in the business of recruitment involving human resources consulting and executive search.  It is headquartered in Western Australia and has an office in Sydney, New South Wales.  Its business is conducted within Australia.  The defendant was employed by the plaintiff as its chief executive officer from 29 June 2012 to 18 May 2020.  The plaintiff terminated the defendant's employment summarily. 

4. The defendant's terms and conditions of employment were set out in a contract of employment dated on or about 25 October 2017.  Relevantly, clause 38 of the contract sets out restrictive covenants post termination of employment which are said to be designed to 'protect the goodwill of the business' in respect of its clients and customers.  'Client' is defined to be an actual client or customer of the plaintiff: cl 38.1.  'Competing Business' is defined to be any business that is substantially similar to or competitive with the plaintiff's business: cl 38.1. 'Restricted Areas' is relevantly defined in a cascading scale extending from any country in which the applicant does business to the metropolitan area of each capital city in Australia: cl 38.1.  (There may be a typographical error in the definition of 'Restrictive Areas' in that there is reference to 'Shareholder'.  That should perhaps to be a reference to 'Executive').  Whether or not there is an error in the clause is not relevant for the determination of the issues on this application.  'Restricted Periods' is again defined on a cascading scale: cl 38.1.  The maximum period is 12 months.  That maximum period would expire on 18 May 2021.  The minimum period is three months which would be about 18 August 2020. 

5. The restraint purports to restrict the defendant from not being involved in any competing business nor in any way soliciting, enticing or accepting an approach from a client of the plaintiff 'for the benefit of Competing Business or with the intention or likely consequence that the Client ceasing or reducing its business it does or may have otherwise done with the plaintiff: cl 38.2(c).  The defendant is further purportedly restrained from interfering to the plaintiff's detriment with the plaintiff's relationship with, among others, any Client: cl 38.3(f). 

6. The prime focus of both parties in both written and oral submissions was the question of whether the plaintiff may have a cause of action against the defendant.  This disagreement was conducted against the recent Court of Appeal decision in BWS v ARV [No 2] [2021] WASCA 62. As might be expected, there was a sharp disagreement between the parties as to how the relevant facts fitted with the legal principles. Both counsel undertook a detailed analysis of the textual and contextual nature of the employment relationship. However, for the purposes of this application it is not strictly necessary for me to consider the merits or otherwise of the respective parties' position. In my view, the plaintiff's application fails on other grounds.

7. In its originating summons, the plaintiff seeks 'all records of communications' between the defendant and representatives of certain entities between 22 March 2020 and the date of any order. There are then 16 entities named. Those entities include some of Australia's biggest companies. They also include a company known as Aurizon. Apart from correspondence with Aurizon (which I will deal with more full below), there is no evidence the plaintiff has made any enquiries with any of the other named corporations. So not only has the plaintiff not made 'reasonable enquiries' as is required by the terms of O 26A r 4 of the RSC, it has not made any enquiries at all. It follows no order for discovery could be made in respect of those 15 of the named entities.

8. As to Aurizon, on 1 December 2020, the plaintiff's solicitors sent an email to Ms Carla Garvie, an executive of Aurizon.  That email reads as follows:[1]

   [1] Affidavit of David Sourbutts affirmed 21 December 2020, Annexure DS39.

   We act for Harrier Group Pty Ltd (Harrier). 

   We are instructed that:

   •between August 2018 and May 2020, you and other staff members at Aurizon engaged with Ms Kelly Reynolds (or Ms Kelly Quirk, as you may know her), in her capacity as CEO of Harrier, in respect of HR services that Aurizon was seeking to engage Harrier to provide;

   •Harrier presented a workshop on Diversity and Inclusion to Aurizon in February 2020; and

   •Aurizon engaged in communications with Harrier regarding a proposal and potential workshop in respect of implementing a flexible work review and other talent and inclusion and diversity initiatives by Aurizon.

   Ms Reynolds' employment terminated in May 2020.  Shortly after Ms Reynolds' termination, Aurizon advised Harrier that the previously scheduled meetings between representatives of Harrier and Aurizon were being placed on hold until further notice.

   We understand that since Ms Reynolds' termination in May 2020, and on more than one occasion, Aurizon sent calendar invitations to Ms Reynolds' work email account and personal email account in respect of the same and/or similar topics as those referred to above.  Shortly after receiving those invitations, the invitations were cancelled by Aurizon.  Harrier believes that Ms Reynolds may be continuing to provide services to Aurizon.

   Can you please:

   •advise whether Aurizon has been communicating with Ms Reynolds since 18 May 2020 for the purposes of engaging her to perform services for Aurizon; and

   •if so, provide copies of those communications?

   If you would like to discuss this matter further, please do not hesitate to contact me.

   We look forward to hearing from you. 

9. On 7 December 2020, Aurizon responded through Mr Scott MacNeill, associate general counsel.  The response reads as follows:[2]

   Thank you for the below email, which has been provided to me to respond on behalf of Aurizon. 

   It is not Aurizon's practice to provide information or documentation of the type you have requested to third parties without the express consent of the individual to do so, or where Aurizon would be required to do so by the operation of law. 

   However, in saying the above I'm instructed that at no time since her departure from Harrier (or at any time), has Ms Reynolds provided services for remuneration to Aurizon in any capacity. 

   If you have further queries in relation to the above please contact me directly. 

   [2] Affidavit of David Sourbutts affirmed 21 December 2020, Annexure DS40.

10. During the course of her submissions, counsel for the defendant maintained that given the invitation in the final paragraph of Mr MacNeill's email, it would have been appropriate for the plaintiff's solicitors to have made further enquiries with Aurizon.  By implication at least, her submission was to the effect no reasonable enquiries had been made.  In my view, the steps taken by the plaintiff's solicitors were all that was required.  In other words, the enquiries were reasonable.  The email from Mr MacNeill makes it plain Aurizon was not prepared to divulge any further information about their relationship with the defendant.  It is difficult to see how any further communication - oral or written - would alter that position.  That said, it must also be acknowledged the email clearly states there had been no contact between Aurizon and the defendant.  There would not, on the face of it, be any reason to doubt that advice. 

11. There is no doubt there had been some contact between the defendant and Aurizon at least prior to the termination of the defendant's employment.  Aurizon had been a prospective client of the plaintiff since at least August 2018.  Between August 2018 and March 2020, the plaintiff, lead chiefly by the defendant in her role as CEO, engaged with Aurizon on numerous occasions including by giving a presentation at Aurizon's offices on inclusion and diversity policy.  The plaintiff, through the agency of the defendant, had submitted a proposal to Aurizon to provide advice regarding gender diversity and flexible working policies. 

12. The plaintiff says that prior to the cessation of the defendant's employment and on or about 22 March 2020, the defendant told Mr  Sourbutts in effect that if she left the employment of the plaintiff she would continue to support her customers via alternative means.  Given the facts I will detail below, this clearly lead to a suspicion on the part of Mr Sourbutts that the defendant would target the plaintiff's clients - actual and potential - if her employment with the plaintiff ceased.  While the suspicion may have been understandable, it was nothing more than a suspicion and the plaintiff makes no allegation that prior to the termination of the defendant's employment, she had actually taken any steps which might breach the terms of her employment. 

13. On 20 May 2020, two days after the defendant's employment was terminated, Aurizon emailed the plaintiff to arrange a time to meet to discuss the plaintiff's engagement to provide advice on implantation of flexible work policies.[3]  Over the next two days, the plaintiff and Aurizon arranged to meet on 27 May 2020, to discuss the agenda for a follow-up meeting and to meet on 2 June 2020 for the follow-up meeting.[4]  On 25 May 2020, Aurizon cancelled the agenda meeting and advised the meeting would be rearranged for another time.[5]  Soon after, the defendant advised the plaintiff that Aurizon was no longer engaging the plaintiff despite the fact that Aurizon had not advised the plaintiff of that fact.  That, the plaintiff says, indicates the defendant as probably having discussions directly with Aurizon at the time. 

    [3] Affidavit of David Sourbutts affirmed 21 December 2021, Annexure DS16.

    [4] Affidavit of David Sourbutts affirmed 21 December 2021, Annexures DS17 - DS21.

    [5] Affidavit of David Sourbutts affirmed 21 December 2021, Annexure DS23.

14. There was further engagement between the plaintiff and Aurizon between 3 September 2020 and 7 October 2020.[6]  Some of these emails went to the defendant's private email address.  The plaintiff says this indicates there was clearly ongoing discussions between Aurizon after the cessation of her employment.  Furthermore, the fact Aurizon did not engage the plaintiff indicates the plaintiff may have suffered loss as a consequence of the breach by the defendant of the restraint clauses in her employment contact. 

    [6] Affidavit of David Sourbutts affirmed 21 December 2021, Annexure DS17, DS30 - DS33.

15. In her affidavit the defendant says that from early 2017, she developed a personal friendship with Carla Garvie, an executive with Aurizon.[7]  The relationship was such that the defendant communicated with Ms Garvie about social and personal matters.  The defendant acknowledges she had discussions with Ms Garvie.  What she does not explain is how it came about that certain email exchanges between the plaintiff and Aurizon were copied to her private email address.  But the thrust of her evidence is clear.  She says she never engaged with Aurizon, either through Ms Garvie or otherwise, in a business sense.  She therefore did not undertake any activity which might be construed as a breach of any restraint of trade clause.  Perhaps more importantly, the defendant says:[8]

    I affirm that I have no documents, presentations or proposals in my possession, custody, or power, that I have prepared or made or sought payment for relating to me and representatives of the following entities which allegedly came into existence between 22 March 2020 and the date of this affidavit:

    …

    [7] Affidavit of Kelly Reynolds affirmed 12 March 2021, par 55.

    [8] Affidavit of Kelly Reynolds affirmed 12 March 2021, par 83.

16. The defendant then lists the 16 entities referred to in the originating summons.  Her position could hardly be clearer.  She has gone on oath saying she has no documents which fit the description found in the originating summons. 

17. Accordingly, there would be no utility in ordering discovery.  The defendant's position is quite clear.  Having her repeat that position in another affidavit would serve no useful purpose.  Furthermore, any applicable restraint has either expired or would expire in the next few days following the hearing of the application.  There is no prospect of the plaintiff obtaining any injunctive relief.  If the plaintiff takes the view its business has been damaged by the actions of the defendant, then its claim is historical and it would need to calculate its damage before issuing proceedings.  It is difficult to see how making an order on the originating summons would assist this task.

18. In all the circumstances I am satisfied the plaintiff's application ought be dismissed.  On publication of these reasons, the parties ought agree a minute of orders.  If agreement cannot be reached in relation to costs, short submissions of no more than one page should be made on this issue. 

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.

CB

Associate to Master Sanderson

2 JUNE 2021