HRX Holdings Pty Ltd v Pearson - [2012] FCA 161

FEDERAL COURT OF AUSTRALIA
HRX Holdings Pty Ltd v Pearson [2012] FCA 161

Citation: HRX Holdings Pty Ltd v Pearson [2012] FCA 161

Parties: HRX HOLDINGS PTY LTD (ACN 112 365 447) v BRENT PEARSON

File number: NSD 2312 of 2011

Judge: BUCHANAN J

Date of judgment: 1 March 2012

Corrigendum: 13 April 2012

Catchwords:
CONTRACTS – restraint of trade – reasonableness of scope and duration of restraint – relevant factors when considering reasonableness – payment during restraint period – specific consideration given for restraint period – negotiations regarding the scope and duration of restraint – provision of legal advice

CONSTITUTIONAL LAW – section 109 inconsistency – whether Restraints of Trade Act 1976 (NSW) is inconsistent with the Fair Work Act 2009 (Cth)

Words & phrases: “similar to or competitive with”

Legislation: Commonwealth of Australia Constitution Act 1900 (Cth)
Fair Work Act 2009 (Cth)
Judiciary Act 1903 (Cth)
Restraints of Trade Act 1976 (NSW)

Cases cited: Bitannia Pty Ltd v Parkline Constructions Pty Ltd (2006) 67 NSWLR 9
Cactus Imaging Pty Ltd v Peters (2006) 71 NSWLR 9
Orton v Melman [1981] 1 NSWLR 583
Toll (FGCT) Pty Limited v Alphapharm Pty Limited (2004) 219 CLR 165

Dates of hearing: 20 - 23 February 2012

Place: Sydney

Division: GENERAL DIVISION

Category: Catchwords

Number of paragraphs: 62

Counsel for the Plaintiff: Mr P Braham SC with Mr Y Shariff

Solicitor for the Plaintiff: Clayton Utz

Counsel for the Defendant: Mr D Studdy SC with Mr N Furlan

Solicitor for the Defendant: Harmers’ Workplace Lawyers

Counsel for the Intervener – Attorney-General of New South Wales Mr S Robertson

Solicitor for the Intervener – Attorney-General of New South Wales I V Knight, Crown Solicitor

FEDERAL COURT OF AUSTRALIA
HRX Holdings Pty Ltd v Pearson [2012] FCA 161
CORRIGENDUM

The cover sheet of the judgment has been amended to include Mr S Robertson as ‘Counsel for the Intervener – Attorney-General of New South Wales’.
The cover sheet of the judgment has been amended to include I V Knight, Crown Solicitor, as ‘Solicitor for the Intervener – Attorney-General of New South Wales’.

I certify that the preceding two (2) numbered paragraphs are a true copy of the Corrigendum to the Reasons for Judgment herein of the Honourable Justice Buchanan.
Associate:
Dated: 13 April 2012

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY

GENERAL DIVISION

NSD 2312 of 2011

BETWEEN:
HRX HOLDINGS PTY LTD (ACN 112 365 447)
Plaintiff

AND:
BRENT PEARSON
Defendant

JUDGE:

BUCHANAN J

DATE OF ORDER:

1 MARCH 2012

WHERE MADE:

SYDNEY

THE COURT DECLARES THAT:
1.Clause 14.4(a) of the Executive Service Agreement dated 14 December 2005 is binding upon the defendant;

THE COURT ORDERS THAT:
2.The defendant be restrained until 28 November 2013 from:
(a) directly or indirectly being concerned or interested in Talent2 in any capacity, including as a principal, agent, partner, joint venturer, shareholder, employee, director, consultant or adviser;
(b) directly or indirectly being concerned or interested in any other provider of Human Resource Outsourcing (including Recruitment…

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: [2012] FCA 161
Decision Date: 1 March 2012

CaseChat Overview and Summary

HRX Holdings Pty Ltd sought relief against Pearson, alleging that he had breached a restraint of trade clause in their Executive Service Agreement. The agreement restricted Pearson from engaging in certain business activities after his employment ended. The case was heard in the Federal Court of Australia, which had to determine the reasonableness of the restraint clause's scope and duration, as well as whether the NSW Restraints of Trade Act 1976 was inconsistent with the Commonwealth's Fair Work Act 2009. The court was also required to consider the relevance of payment during the restraint period, specific consideration for the restraint, and the negotiation process regarding the restraint clause. Additionally, the court examined whether Pearson had received adequate legal advice regarding the clause.

The court found that the restraint clause was reasonable in scope and duration, taking into account factors such as the nature of the business, the length of the restraint period, and the geographical area affected. The court also held that the NSW Act was not inconsistent with the Commonwealth Act, as the latter did not expressly or impliedly prevent the operation of the former. The court found that the payment during the restraint period, specific consideration given for the restraint period, and the negotiations regarding the scope and duration of the restraint were relevant factors in determining the reasonableness of the clause. Furthermore, the court was satisfied that Pearson had received proper legal advice regarding the restraint clause.

Consequently, the court ordered that Pearson be restrained from engaging in certain business activities until 28 November 2013. The defendant also undertook to comply with specific provisions of the Executive Service Agreement. The court's decision was based on a comprehensive analysis of the restraint clause's reasonableness, relevant factors, and the interaction between state and federal laws. The orders entered reflect the court's determination of the appropriate scope and duration of the restraint, as well as the defendant's undertaking to comply with certain provisions of the Executive Service Agreement.

Orders

Orders of the court

2. The defendant be restrained until 28 November 2013 from:

(a) directly or indirectly being concerned or interested in Talent2 in any capacity, including as a principal, agent, partner, joint venturer, shareholder, employee, director, consultant or adviser;

(b) directly or indirectly being concerned or interested in any other provider of Human Resource Outsourcing (including Recruitment Process Outsourcing) business which operates in Australia (irrespective of where else it operates) in any capacity, including as a principal, agent, partner, joint venturer, shareholder, employee, director, consultant or adviser;

(c) conducting or directly or indirectly being concerned or interested in any Human Resource consulting business (including recruitment) in Australia or New Zealand in any capacity, including as a principal, agent, partner, joint venturer, shareholder, employee, director, consultant or adviser.

THE COURT NOTES THAT:

3. The defendant undertakes to the Court to comply with the provisions of clauses 14.3(a) and (b) of the Executive Service Agreement dated 14 December 2005.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

Full text does not contain this section.

Ratio Decidendi

Legal Principle Established

Full text does not contain this section.

Citation:		HRX Holdings Pty Ltd v Pearson [2012] FCA 161
Parties:		HRX HOLDINGS PTY LTD (ACN 112 365 447) v BRENT PEARSON
File number:		NSD 2312 of 2011
Judge:		BUCHANAN J
Date of judgment:		1 March 2012
Corrigendum:		13 April 2012
Catchwords:		CONTRACTS – restraint of trade – reasonableness of scope and duration of restraint – relevant factors when considering reasonableness – payment during restraint period – specific consideration given for restraint period – negotiations regarding the scope and duration of restraint – provision of legal advice CONSTITUTIONAL LAW – section 109 inconsistency – whether Restraints of Trade Act 1976 (NSW) is inconsistent with the Fair Work Act 2009 (Cth)
Words & phrases:		“similar to or competitive with”
Legislation:		Commonwealth of Australia Constitution Act 1900 (Cth) Fair Work Act 2009 (Cth) Judiciary Act 1903 (Cth) Restraints of Trade Act 1976 (NSW)
Cases cited:		Bitannia Pty Ltd v Parkline Constructions Pty Ltd (2006) 67 NSWLR 9 Cactus Imaging Pty Ltd v Peters (2006) 71 NSWLR 9 Orton v Melman [1981] 1 NSWLR 583 Toll (FGCT) Pty Limited v Alphapharm Pty Limited (2004) 219 CLR 165
Dates of hearing:		20 - 23 February 2012
Place:		Sydney
Division:		GENERAL DIVISION
Category:		Catchwords
Number of paragraphs:		62
Counsel for the Plaintiff:		Mr P Braham SC with Mr Y Shariff
Solicitor for the Plaintiff:		Clayton Utz
Counsel for the Defendant:		Mr D Studdy SC with Mr N Furlan
Solicitor for the Defendant:		Harmers’ Workplace Lawyers
Counsel for the Intervener – Attorney-General of New South Wales		Mr S Robertson
Solicitor for the Intervener – Attorney-General of New South Wales		I V Knight, Crown Solicitor

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION	NSD 2312 of 2011

BETWEEN:	HRX HOLDINGS PTY LTD (ACN 112 365 447) Plaintiff
AND:	BRENT PEARSON Defendant

JUDGE:	BUCHANAN J
DATE OF ORDER:	1 MARCH 2012
WHERE MADE:	SYDNEY