Inches v Integrated Managed Services Pty Ltd - [2009] WADC 185

JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
IN CIVIL

LOCATION: PERTH

CITATION: INCHES -v- INTEGRATED MANAGED SERVICES PTY LTD [2009] WADC 185

CORAM: O'BRIEN DCJ

HEARD: 5, 6 & 13 NOVEMBER 2009

DELIVERED : 3 DECEMBER 2009

FILE NO/S: CIV 1734 of 2008

BETWEEN: PAUL INCHES
Plaintiff
AND
INTEGRATED MANAGED SERVICES PTY LTD (ACN 088 574 485)
Defendant

Catchwords:

Plaintiff's claim for payment of completion bonus under contract of employment - Counterclaim for breach of contract by plaintiff - Whether plaintiff failed to comply with lawful instruction to provide information - Whether plaintiff breached restraint of trade clause in his employment contract - Turns on own facts

Legislation:

Nil

Result:

Plaintiff's claim upheld
Counterclaim dismissed

Representation:

Counsel:

Plaintiff: Mr P McGowan
Defendant: Mr R Hooker

Solicitors:

Plaintiff: DLA Phillips Fox
Defendant: Mallesons Stephen Jaques

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

Amoco Australia Pty Ltd v Rocca Bros Motor Engineering Co Pty Ltd (1973) 133 CLR 288
Ausdale Enterprises Pty Ltd v Sandford [2006] WASCA 191
Austra Tanks Pty Ltd v Running (1982) 2 NSWLR 840
Butt v Long (1953) 88 CLR 476
Cream v Bushcolt Pty Ltd [2004] WASCA 82
Lindner v Murdock's Garage (1950) 83 CLR 628
Masterclass Enterprises Pty Ltd v Bedshed Franchisors (WA) Pty Ltd [2008] WASCA 67
Nordenfelt v Maxim Nordenfelt Guns & Ammunition Co Ltd [1894] AC 535
Peters American Delicacy Co Ltd v Patricia's Chocolate & Candies Pty Ltd (1947) 77 CLR 574
Sear v Invocare Australia Pty Ltd [2007] WASC 30
TSV Holdings v Evans & Anor [2008] VSC 157

O'BRIEN DCJ:

Introduction

Mr Paul Inches is an industrial relations consultant. IMS is a labour hire firm.
On 15 May 2006 Mr Inches contracted with IMS to work for the Pilbara Iron Ore and Infrastructure Project ("the project").
IMS paid Mr Inches an agreed daily rate which varied according to whether Mr Inches was working in Perth or onsite in the Pilbara.
The Inches/IMS contract provided for the payment to Mr Inches of a completion bonus on being "demobilised" from the project subject to certain conditions.
On 18 May 2006, IMS contracted with Worley Parsons Services Pty Ltd (as agent for Pilbara Infrastructure Pty Ltd) to provide the services of Mr Inches to the project. The contract provided that Worley Parsons pay IMS a monthly sum.

The claim

Mr Inches' claim is that IMS has not paid him the agreed completion bonus. He also claims a payment of a living away from home allowance.
The defence narrowed during the trial. It is that Mr Inches is not entitled to the completion bonus because he did not comply with the agreed conditions for the bonus and that he "abandoned" his employment.
IMS abandoned its defences that Mr Inches breached his contract by failing to give notice of termination and that Mr Inches' departure from the project in March 2008 was the result of a "disciplinary and/or serious misconduct".
IMS also abandoned its defence to Mr Inches' claim for a living away from home allowance but seeks to set-off that amount against Mr Inches' claim.

The counterclaim

IMS counterclaims that Mr Inches breached the contract by:
1.Failing to provide certain information in support of its claim for so‑called "excess hours" he worked. As a result, IMS claims that it could not invoice Worley Parsons for the excess hours worked by Mr Inches. IMS seeks damages amounting to the value of the excess hours worked.
2.Breaching the restraint of trade clause in the contract ("restraint") by taking up employment with Worley Parsons after his employment ended with IMS whereby he was "mobilised" back onto the project as industrial relations manager. IMS seeks damages being the value to IMS of Mr Inches working six months under a new contract between IMS and Worley Parsons.
Mr Inches denies breaching the contract.
As to the counterclaim for the value of the excess hours worked, Mr Inches contends that IMS was not entitled to be reimbursed by Worley Parsons. However, if that were the case, IMS has not suffered any loss. Mr Inches contends the claim made by IMS was in effect a request to vary the IMS/Worley Parsons contract, which request was rejected by Worley Parsons.
Mr Inches admits that he took up employment with Worley Parsons but contends that the restraint in his contract is void and unenforceable. Further, Mr Inches asserts that on 13 March 2008, Mr Rick Reynolds, a director of IMS, consented to Mr Inches' employment with Worley Parsons and therefore IMS is estopped from relying on the restraint provisions. In any event, Mr Inches denies that IMS suffered any loss as a result of him taking up employment with IMS.

The issues

The issues to be determined are these.

The completion bonus

In what circumstances was Mr Inches entitled to the completion bonus?
Did Mr Inches fulfil the conditions under his contract for payment of the completion bonus?

The excess hours

Was IMS entitled to be reimbursed by Worley Parsons for the excess hours worked by Mr Inches or was the claim one for a variation of the IMS/Worley Parsons' contract?
If IMS was entitled to be reimbursed for excess hours worked by Mr Inches, did he fail to provide the relevant information to enable IMS to invoice Worley Parsons for the excess hours worked?

Restraint of trade

Is the restraint in Mr Inches' contract void and unenforceable?

Mr Inches' contract with IMS

IMS employed Mr Inches pursuant to a written contract dated 15 May 2006. The contract provided:
"Your employment will be for a limited term contract providing industrial relations consulting services associated with the [project]. The anticipated duration of the [project] assignment is for a period not exceeding twenty-four (24) months. The duration is subject to requirements associated with the project and the project receiving the requisite project funding arrangement.
The contract may be extended by mutual agreement between yourself and IMS subject to the requirements of the client and other available ongoing IMS work opportunities."
Under the contract IMS agreed to pay Mr Inches $600 per day for Perth‑based work and $770 per day for site‑based work. The daily rate was revised by letter dated 1 November 2006 to $660 a day for Perth‑based work and $808.50 per day for site‑based work effective from 19 September 2006.
The contract provided for a completion bonus.
By letter dated 8 February 2007, IMS varied the contract and it was agreed that the completion bonus rate was to be 15 per cent backdated to the start of Mr Inches' engagement.
That letter outlined that Mr Inches' entitlement to a completion bonus was subject to him:
1.Completing satisfactorily a 90 day probationary period with the project. (There is no dispute about the fulfilment of this condition.)
2.Completing an assignment length of more than 90 continuous days. (There is no contest about the fulfilment of this condition.)
3."Being demobilised from the project in accordance with the demobilisation plan approved by the project manager". (The fulfilment of this condition is in dispute.)
Further, the variation letter provided:
"Departure from the project that is initiated by the individual and not in accordance with the project demobilisation plan, or as the result of disciplinary and/or serious misconduct, will make the person ineligible for the completion bonus."
IMS assert that Mr Inches initiated his departure from the project and that it was not in accordance with the project demobilisation plan.
The contract provided that the specified hours of work are 38 hours per week. Further, the contract provided that Mr Inches was "also expected to work reasonable additional hours as required, on any day of the week (including weekends and public holidays) to be worked between the hours of 6 am to 6 pm".
Relevantly the contract provided:
"The site based assignment is based on a nominal standard working day of up to ten (10) hours per day including weekends and public holidays. This is based on working at the relevant project site locations in the Pilbara regions of Western Australia.
Your hours of work will need to be flexible to suit the requirements and demands to complete the duties of work involved with the position.
You will be required to work reasonable additional hours to complete specific tasks and such time as is necessary for the proper discharge of your responsibilities encompassed in your position as senior industrial relations consultant …
The R&R cycle is based on twenty‑two (22 days) rostered for work on site followed by six (6) days rostered off on unpaid leave. This comprises twenty‑one days work of ten hours plus one (1) days' rest …"

The project

The project was referred to as the "Team 45 project". It involved the establishment of the Cloudbreak (iron ore) mine, a railway connecting the mine to the port at Port Hedland and the port infrastructure. As I understand it, the project was owned by Fortescue Metals Group (FMG). Team 45 comprised FMG personnel, Worley Parsons staff, staff provided to Worley Parsons through contracts which it had with various agencies such as IMS. Mr Inches fell into the last category.
The capital cost of the project was $AUD1.85 billion. Over the duration of the project, around 11,000 personnel were employed of which 80 – 85 per cent were contracted through agencies to Worley Parsons. At its peak, there were 5,000 people working on the project.
The project director was Mr Gordon Cowe. Worley Parsons employed him. He had other project managers reporting to him. The project had a flat line organisational structure. Mr Inches' role was as the industrial relations (IR) consultant. He reported to Mr Cowe.
The project was scheduled to end on 31 March 2008. However, a cyclone in March 2007 delayed its effective completion. An unspecified number of employees was demobilised by 31 March 2008. The evidence is that some employees were retained on what was called the "expansion project" which effectively continued the Team 45 project to enable iron ore to be shipped to China by May 2008.

The Worley Parsons/IMS contract

Pursuant to the Worley Parsons/IMS contract, IMS agreed to place Mr Inches as senior industrial relations consultant and a key member of the Worley Parsons' project management team. Worley Parsons agreed to pay IMS $30,000 per month where Mr Inches was primarily based in the Perth office with infrequent travel to the site and $36,500 per month which would apply once Mr Inches relocated to site and commenced the onsite R&R work cycle or if he spent more than 60 per cent of his time working onsite in any one month whilst based in the Perth office.
Those monthly rates included an allowance of 20 hours per month ongoing support to Mr Inches and the project by Mr Rick Reynolds, the managing director of IMS, and another IMS employee.
The contract specified that the standard working hours were to be nine hours per day Monday to Friday in Perth; a 10‑hour day onsite being a 13‑day fortnight with an R&R cycle of 28 days on and seven days off; and additional hours to be worked subject to project requirements.
The contract provided that the onsite rate shall be subject to change should the R&R cycle change throughout the course of the project.
Further, the contract provided that Worley Parsons "may at any time and for any reason whatsoever terminate the agreement on written notice".
The term of the contract was "until completion of the services by IMS".

Relevant differences in the two contracts

The two contracts differ. For example: IMS agreed to pay Mr Inches a daily rate, whereas Worley Parsons agreed to pay IMS a monthly fee for the services of Mr Inches. The R&R cycles were different in each contract. There was no provision in the Worley Parsons/IMS contract for IMS to be reimbursed for paying a completion bonus.

The factual issues

When did Mr Inches' employment end with Worley Parsons?

It is clear that the terms of Mr Inches' contract with IMS was independent of the Worley Parsons/IMS contract.
As the Inches/IMS contract was for a limited term with the duration of the contract governed by the term of the project, more specifically "subject to requirements associated with the project", in my view, if the project came to an end or if Worley Parsons terminated its contract with IMS, Mr Inches' employment with IMS would end: that is, his contract with IMS would come to an end. It follows that if either of those events occurred, Mr Inches would be entitled to the completion bonus subject to him complying with the conditions as outlined in the letter dated 7 February 2007.
The undisputed evidence is that the Team 45 project ended on 31 March 2008 with the expansion project commencing thereafter.
Worley Parsons terminated its contract with IMS on 25 March 2008. According to Mr Cowe the contract was terminated because there was no further need for Mr Inches' services on the project.

The circumstances of Mr Inches' leaving his employment with IMS

It is implicit in the way the case was argued that IMS' position is that the real reason for terminating the Worley Parsons/IMS contract was to engage Mr Inches as an employee of Worley Parsons. From January 2008, Worley Parsons and Mr Inches had been in discussions about Mr Inches' future employment with Worley Parsons after the project came to an end. When Mr Inches commenced working for Worley Parsons he was immediately seconded to the expansion project. IMS' claim in effect is that Mr Inches initiated his departure from the project so that he could be employed with Worley Parsons. This claim necessarily implies that, through Mr Cowe, Worley Parsons was implicated in this.
The evidence is that the Team 45 project was scheduled to end on 31 March 2008. The cyclone in 2007 delayed the project. According to Mr Cowe, Mr Forrest (FMG) still wanted the project to finish on 31 March 2008. After 31 March 2008, the expansion project commenced which was directed to shipping ore to China by May 2008.
On 25 March 2008, Mr Cowe wrote to IMS terminating the IMS/Worley Parsons contract for the supply of Mr Inches' services ("the termination letter"). Worley Parsons had decided to meet its obligation in relation to a "retention bonus" for some personnel, although some were kept on until May 2008. As at 25 March 2008, the mine, port and rail were at the "commissioning phase".
Mr Cowe said that he had made up his mind in early March that there was no need to retain Mr Inches after 25 March 2008.
Mr Cowe testified that after the end of the Team 45 project, there was an expansion project which was to take FMG's capacity from 45 million tonnes to 160 million tonnes a year by May 2011. This involved another mine site called the Christmas Creek mine. The expansion project also included an expansion of the port facilities and duplication of the rail.
Mr Cowe said that a week or two before writing the termination letter he spoke with Mr Van Dongen, the contract manager with Worley Parsons, and asked if there would be an exposure if Worley Parsons employed by Mr Inches in the future. He said that Worley Parsons did not "steal" staff from contractors such as IMS. However, at the end of a project, if a person was a free agent, and their employment would be a strategic fit with Worley Parsons, Worley Parsons would make them an offer. Mr Cowe said he spoke with the HR department inquiring whether an IR specialist might be needed on a number of other projects which were on the horizon. He considered that an IR specialist was essential given the business that Worley Parsons was moving into "off the back of FMG".
Mr Cowe said that he had seen Mr Inches in action and regarded him as a good operator. He and Mr Inches had discussions in early 2008 about the possibility of Worley Parsons engaging him directly. The discussions centred around Mr Inches having a staff contract which would involve him working at different places and sites from time to time. These discussions were in general terms. Mr Cowe did not get into detailed discussions about location, salary or conditions with Mr Inches.
Mr Inches then discussed a contract with Mr Steven Tobin who was with the HR department. Mr Cowe's understanding was that the role to be offered to Mr Inches was an IR specialist within Worley Parsons.
My understanding of Mr Cowe's evidence is that Worley Parsons needed an IR specialist as there were a number of projects on the horizon. He expected Mr Inches would be allocated to a project where he was needed.
Mr Cowe said he did not have a written demobilisation plan. However he said that there was planning every week, every fortnight, every month and complexity given the size of the project. It was a micro‑managed project. Mr Cowe said that [management] knew exactly what was going on. When it came to personnel, he discussed requirements with the project managers and a list of who was going and who was staying was made up. It was necessary to consider staffing levels because there was a cost overrun on the project of $500 million. Mr Cowe said he had the ultimate responsibility to decide which managers stayed and which went. This decision was made on a consultative basis. Mr Cowe said that he had a more direct involvement in this decision if the person concerned reported directly to him. Even then the decision would be made after taking advice from managers.
Despite the expansion of the project after 31 March 2008, as far as Mr Cowe was concerned, Mr Inches was no longer required on the Team 45 project, hence the termination letter. The last time he recalled Mr Inches working on the Team 45 project was in mid to late March but before 25 March. At that point, he was hopeful that Mr Inches was coming back to provide consultancy services to Worley Parsons in April 2008. Mr Cowe said that the prospect of Mr Inches returning to work for Worley Parsons directly did not influence his decision to terminate the Worley Parsons/IMS contract. That decision was made on the needs of the project.
Mr Cowe said he did not give any consideration to continuing the services of Mr Inches through IMS. It was a strategic business decision to engage Mr Inches. He did not know anything about the Worley Parsons/IMS contract.
Mr Van Dongen's understanding was that there was no more work for Mr Inches to perform on the project therefore the Worley Parsons/IMS contract was terminated.
Under cross-examination, Mr Van Dongen said he equated demobilisation with termination of an employee's employment. There was no written demobilisation plan. According to Mr Van Dongen, it "was a concept in the service manager's (Bill Burnett) head" and FMG gave instructions that everyone had to be terminated by 31 March 2008.

Mr Inches re termination

Mr Inches said that Mr Cowe approached him in January 2008 with a view to employment with Worley Parsons after the project finished.
Mr Inches said he told Mr Reynolds about this approach at a meeting in a hotel café sometime in January 2008. He said that he told Mr Reynolds that the project was due to finish on 31 March 2008 and that all contracts would be terminated by then. Mr Reynolds confirmed that Mr Inches raised the possibility of working with Worley Parsons after the project finished. However, Mr Reynolds' memory about the conversation was hazy. He had no recollection of Mr Inches telling him that the project was due to end on 31 March 2008.
Mr Reynolds said that he met with Mr Inches again on 7 March 2008 at the IMS offices at Canning Bridge. Mr Inches expanded on the discussions he had with Worley Parsons. Mr Reynolds said that Mr Inches told him that the role with Worley Parsons was as a permanent staff member in IR based anywhere in Australia with his preference being Brisbane, and that he wished to finish his contract with IMS by the end of March. Mr Reynolds said he asked Mr Inches if the role was based on the project and Mr Inches said that it was not. Mr Inches said that based on those discussions, he was "pretty comfortable" as he perceived there were some opportunities for IMS beyond Western Australia with Mr Inches in the national IR role. Mr Reynolds said that he required Mr Inches to tidy up a few things such as the completion bonus and the claim IMS had to be reimbursed for the "excess hours" worked by Mr Inches.

He followed up that request by an e-mail to Mr Inches dated 13 March and made the following requests:
1.IMS receives formal written advice from the project director Gordon Cowe or his nominee that Mr Inches has been demobilised by Team 45 from the project in accordance with the requirements that make him eligible to receive the Team 45 completion bonus.
2.That Mr Inches notify IMS in writing of his intention to join Worley Parsons in a permanent employment position and that he wished to terminate his employment with IMS on 31 March 2008.
He also wanted confirmation that Mr Inches waived the one month resignation notice period.
The email ended with a suggestion of a get together to give Mr Inches "a send‑off befitting of [his] new status in life".
Mr Reynolds said that he only became aware of the termination of the contract by email on 26 March 2008 from Mr Heiko Plange, IMS' general manager, attaching Worley Parsons' termination letter.
Mr Reynolds said that on 26 March 2008 he instructed Mr Inches to return to Perth to help IMS understand why Worley Parsons had terminated the contract and to assist in the claim IMS had for reimbursement of the excess hours worked. Mr Reynolds said that he believed the Inches/IMS contract was still in force despite the termination of the Worley Parsons/IMS contract on 25 March 2008.
Mr Reynolds said that he and Mr Plange met with Mr Inches on 28 March 2008 at the IMS offices in Canning Bridge.
I refer to the discussions at that meeting concerning excess hours below.
Mr Reynolds said that he asked Mr Inches if he knew why the contract was terminated and Mr Inches replied that Mr Cowe was upset at Mr Reynolds' email to Mr Inches telling him to work according to the site roster.
It is clear that the meeting was not amicable.
Mr Inches was aggrieved because he thought Mr Reynolds was disputing his honesty and integrity about the hours he had worked. Mr Inches asked for leave and Mr Reynolds refused it. Mr Inches indicated that he was going on leave in any event.
It should be noted that around that time Mr Inches had received information that his wife had suffered a serious medical condition and it was necessary for him to fly to Queensland to attend to personal matters. Mr Inches testified that he was in a very emotional state.
Mr Reynolds said he challenged Mr Inches about being offered a permanent salaried position at Worley Parsons and Mr Inches was adamant that he had but was not sure if it was going to be a national job.
According to Mr Reynolds, the meeting ended with Mr Inches walking out. It is on this basis that IMS claims that Mr Inches abandoned his employment on 28 March 2008.
On 14 April 2008 and again on 28 May 2008 Mr Reynolds wrote to Mr Inches. In the May letter Mr Reynolds observed that Mr Inches had abandoned his employment and was working at FMG in contravention of his contract with IMS. This is the only time Mr Reynolds raised any issue about the restraint with Mr Inches.

Was there a demobilisation plan?

There was no evidence as to what constituted a demobilisation plan.
It is clear that there was not a written demobilisation plan in relation to Mr Inches' employment. However, Mr Inches reported directly to Mr Cowe who, as the project director, was obviously the person who could approve a demobilisation plan given the organisational structure of Worley Parsons in the Team 45 project.
The position of IMS was that there was no demobilisation plan. I do not agree. Despite there being no written plan, Mr Cowe was micro‑managing the project. He had consultations with his managers concerning employees who were to be retained after 31 March and who was to go. He consulted with managers about the need to retain Mr Inches on the project and after consultation, came to the view that he was not required. That is why he decided to terminate the Worley Parsons/IMS contract.
As a general proposition, termination of a contract may not necessarily equate to demobilisation. However, in the particular circumstances of this case, when the project was nearing completion, when the project director decided that Mr Inches was no longer required on the project and in those circumstances Mr Cowe terminated the Worley Parsons/IMS contract, that effectively meant that Mr Inches was demobilised from the project. As I have already outlined, this was pursuant to a plan made in the context of Mr Cowe's consultation with his managers as to which employees should stay and which should go.
It is clear that Mr Cowe's decision that Mr Inches was no longer required on the project was part of a considered and consultative approach regarding the retention or otherwise of staff pending the end of the project. In my view, that constituted a demobilisation plan that was ultimately approved by the project director, who was clearly the project "manager".

Did Mr Inches initiate his departure from the project?

There is no dispute that Mr Inches was considering the possibility of a staff position with Worley Parsons from January 2008. That is when he first told Mr Reynolds about it. Mr Inches said that he told Mr Reynolds that the project was going to end on 31 March 2008. Mr Reynolds cannot recall this. I consider it most likely that Mr Inches did tell Mr Reynolds this as Mr Inches knew that that was the end date of the project and it was the sort of information that I would expect Mr Inches to convey to Mr Reynolds at one of their regular meetings.
Mr Inches continued to discuss the possibility of working for Worley Parsons directly from January to March 2008. However, he said that he did not receive a final offer from Worley Parsons until early April 2008. He had not finally made up his mind before then whether to take up an offer of employment with Worley Parsons.
Mr Cowe, not Mr Inches, was the person who initiated these discussions. Mr Inches said that initially he was not particularly interested in working for Worley Parsons directly. In my view, the evidence is clear that it was Mr Cowe's decision based on the needs of what was a massive project that Mr Inches was no longer required. Mr Inches had no influence over the continuation of the Worley Parsons/IMS contract.
In my view, it is implausible that on such a massive project, the project director would terminate a contract with IMS because he wanted to employ Mr Inches directly. Although not alleged in terms, the allegation by IMS also involves an implicit claim that Mr Inches had the clout to persuade Mr Cowe to terminate the Worley Parsons/IMS contract.
I accept Mr Cowe's evidence that he terminated the contract because Mr Inches' services were no longer required.
Counsel for IMS submitted that by entertaining Mr Cowe's suggestion that he work for Worley Parsons directly, and thereafter negotiating towards the prospects of a formal offer, it was plainly Mr Inches who materially "initiated" his own departure from the project.
I find that Mr Inches did not initiate his departure from the project. He did not raise the possibility of working directly for Worley Parsons, Mr Cowe did. Mr Cowe requested him to talk with HR about the possibility of working with Worley Parsons. Mr Cowe was the one who made enquiries as to whether there was any restraint against Worley Parsons in employing Mr Inches. Mr Inches had no say whatsoever as to when the project was to end. Mr Inches had no control over the continuation or termination of the Worley Parsons/IMS contract. However, the undisputed evidence is that in Mr Cowe's view, as project director, Mr Inches' services were no longer required on the Team 45 project.
However, in my view, although Mr Inches took part in discussions with Worley Parsons between January and March 2008, those discussions were directed towards him working for Worley Parsons after, in effect, he was no longer required on the project. It was not Mr Inches' decision that he was no longer required on the project. This was Mr Cowe's decision. There is no evidence that Mr Inches played any part whatsoever in Mr Cowe's decision that he was no longer required on the project.
I therefore reject the claim by IMS that Mr Inches initiated his own departure from the project and that he was not demobilised from the contract in accordance with demobilisation plan approved by the project manager.

The excess hours counterclaim

In its counterclaim IMS alleges that on 28 March 2008 Mr Reynolds verbally requested Mr Inches "to provide details of the working of the excess hours for the purpose of invoicing Worley Parsons" and that Mr Inches breached his contract of employment with IMS by failing to provide that information.
The so‑called excess hours are said to be work performed by Mr Inches over and above the hours stipulated in the Worley Parsons/IMS contract. IMS claims that 39 days work was performed by Mr Inches between July 2007 and February 2008. IMS paid Mr Inches for those 39 days worked.
IMS claims that because Mr Inches failed to supply the requested information, Worley Parsons refused to reimburse IMS for the excess hours.
It is necessary to examine the documentation supporting IMS' claim to Worley Parsons for a variation in the contract.
The first request by IMS for a variation of the contract was made by letter to Mr Van Dongen dated 5 March 2008 ("Claim 1"). It is sufficient to say that the request for variation was for a 10 per cent increase in the monthly rate payable by Worley Parsons to IMS for Mr Inches' services (variation 1) and a 35 per cent variation of the monthly fee to off‑set seven days which Mr Inches worked over Christmas/New Year (variation 2).
Mr Van Dongen rejected Claim 1 by email dated 6 March 2008 for reasons it is not necessary to detail save to say that the rejection was not based on any alleged lack of documentary substantiation for the claim or rejection of the number of days worked by Mr Inches or any concern expressed about the work done by Mr Inches. According to Mr Van Dongen, there was no scope under the existing contract for Claim 1 and having regard to the allowances built into the contract, he could find no basis to vary the existing contract.
It is important to observe that Claim 1 is not the claim the subject of the counterclaim.
I have already referred to the differences in the two contracts.
IMS claims that the request for Mr Inches to substantiate its claim for variation of the Worley Parsons/IMS contract was made when Mr Reynolds and Mr Plange met with Mr Inches on 28 March 2008.
The minutes of the meeting were prepared by Mr Plange (who did not testify) but which Mr Reynolds testified to be accurate. The minutes record at par 24 that Mr Reynolds "required [Mr Inches] to document the sequence of events that had led to IMS being terminated from the contract including the issue regarding the IMS claim for the contract variation to compensate IMS for the additional hours that [Mr Inches] had worked on the Project". This request must have been in the context of the request for variations outlined in Claim 1.
The minutes record at par 28 that Mr Reynolds stated that Mr Inches was the only person who could provide IMS with the information needed to support the basis of the claim to Team 45 and instructed Mr Inches to report to work at the IMS office and to attend to the matter. Although the minutes record at par 29 that Mr Inches said he would not do this, par 32 records that Mr Inches stated that he was prepared to assist IMS and to provide information to substantiate its claim and that he requested that IMS put together a list of questions for him to address.
IMS had already received the termination letter from Worley Parsons. Mr Reynolds testified that he asked Mr Inches if he had any knowledge of the reason why the contract had been terminated. According to Mr Reynolds, Mr Inches replied that he believed that an email Mr Reynolds sent to him instructing him to work 21 days in each 28 calendar days had upset Mr Cowe. Mr Reynolds testified that at some stage during that meeting he questioned the hours that Mr Inches had been working and told him that IMS required substantiation to justify the additional hours. He said that Mr Inches took exception to this, "intimating" that Mr Reynolds was questioning his honesty and integrity.
Mr Reynolds testified that he told Mr Inches that IMS had submitted a claim to Worley Parsons for the excess hours worked and that the claim had been rejected which indicated [to IMS] that Worley Parsons did not consider that the extra hours were warranted. This account is consistent with an e-mail Mr Reynolds sent Mr Inches on 21 March 2008 wherein he wrote that:
"… Team 45 does not appear to accept the additional time you have worked to date to be warranted." (Tab 21)
I reject Mr Reynolds' testimony that he did not intend to give that impression in the email. On Mr Reynolds' own evidence he told Mr Inches that Worley Parsons was in effect disputing the hours worked.
In Worley Parsons' response to Claim 1 made by IMS, Worley Parsons takes no exception to the hours worked by Mr Inches. Worley Parsons did not request any further substantiation by way of documentation for the claim made by IMS dated 5 March 2008. When Mr Van Dongen emailed Mr Plange on 14 March 2008 in response to IMS' letter dated 5 March 2008, he wrote:
"Should [IMS] have any other information that may add to our understanding then it may be reconsidered, but on the information at hand Team 45 see no grounds to change our stance as outlined in our response of 6 March 2008." (Tab 19)
Mr Reynolds agreed under cross-examination that no further documentation was required by Mr Inches to support the claim made on 5 March 2008.
Mr Inches had completed his time sheets as required by his contract with IMS.
Mr Reynolds' advice to Mr Inches regarding Worley Parson's response to Claim 1 both in the email dated 21 March 2008 and at the meeting on 28 March 2008 was plainly wrong.
Even if IMS required further information from Mr Inches to substantiate Claim 1, on Mr Reynolds' account, Mr Inches did not refuse to supply the information but merely asked for the request to be put in writing. No written request was forthcoming.
Mr Reynolds wrote to Mr Inches by letter dated 14 April 2008 purportedly confirming the discussions at the meeting on 28 March 2008, specifically confirming the instruction for Mr Inches to report to IMS' company offices until further notice. He stated the reason that IMS required details of the hours he had worked on the project "for the purposes of invoicing [Worley Parsons] for those hours worked in excess of the standard project hours". That is not the specific request which Mr Reynolds made on 28 March 2008. On that day, Mr Reynolds asked Mr Inches to substantiate the hours worked as Worley Parsons was disputing them. That was not true and, as Mr Reynolds conceded, Mr Inches could provide no further documentation to support or substantiate the hours worked.
As at 28 March 2008, IMS had not revised its claim for a variation of the contract. Such revision was not made until Mr Reynolds' letter to Worley Parsons dated 28 May 2008.
By the time IMS revised its claim on 28 May 2008, it was an entirely different variation from that in Claim 1.
The claim made on 28 May 2008 was a claim in the sum of $67,785.71 representing the 39 days IMS claimed Mr Inches worked outside of the terms of the Worley Parsons/IMS contract ("Claim 2").
By letter dated 29 May 2008, Mr Reynolds again revised the application for variation of the contract made on 28 May 2008. The IMS amended claim was for the sum of $12,166.67 "representing one-third of the applicable monthly fee" ("Claim 3").
As I have observed, the Claims 2 and 3 made by IMS are in substance quite different to Claim 1 and are different from each other at least as to the amount claimed.
There is no evidence that when Mr Reynolds wrote to Mr Inches on 14 April 2008 that IMS had decided to revise its claim against Worley Parsons as manifested in Claims 2 or 3 or at all. By 14 April 2008, Mr Inches was working for Worley Parsons so IMS had no standing or authority to issue directions to Mr Inches.
Accordingly, I am not satisfied that before Mr Inches left the employment of IMS (whether or not he abandoned it as IMS claim he did on 28 March 2008) that there was any information Mr Inches could have given to IMS to substantiate Claim 1.
I make the following findings:
1.The claimed failure to provide information related to Claim 1.
2.On Mr Reynolds' evidence, there was no further documentation required from Mr Inches to support IMS' Claim 1.
3.By the time Mr Reynolds wrote to Mr Inches on 14 April 2008, Mr Inches was no longer employed by IMS. That letter related to Claim 1.
4.Mr Inches did not refuse to provide information in relation to Claim 1 but requested the required information in writing. IMS did not outline the information it claims it needed to substantiate Claim 1.
5.There is no evidence as to when IMS decided to make Claims 2 and 3 other than the May letters.
6.The rejections of Claims 1, 2 and 3 were not made on the basis of a request for any further information. Worley Parsons accepted that Mr Inches had worked the 39 days and that IMS had paid him for that work. The rejections of the claims were based on Worley Parson's interpretation of its contract with IMS.
7.Thus the issue between IMS and Worley Parsons relating to the 39 days worked by Mr Inches did not concern Mr Inches. The matter had to be resolved between IMS and Worley Parsons and Mr Inches could add nothing to resolve that dispute.
I therefore find that Mr Inches did not breach his contact with IMS by failing "to provide details of the working of the Excess Hours for the purpose of invoicing … [Worley Parsons]" as pleaded in par 14 of the counterclaim.

Restraint of trade

IMS claims damages as a result of Mr Inches breaching the restraint in his contract.
The restraint is as follows:
"Except with the prior written consent of IMS, you must not, in any capacity or for any person or entity, for the period to the end of six (6) months from the date your employment terminates, to any extent competitive with IMS:
(a)solicit the business of, or otherwise deal with, the following clients or customers of IMS:
•Worley Parsons Services Pty Ltd
•Fortescue Metals Group Ltd
•Pilbara Iron Ore & Infrastructure Project
(b)Solicit the business of, or otherwise deal with, any clients or customers of IMS with whom you have had dealings in the course of your last 18 months' employment with IMS;
(c)Induce or entice any employee, client or customer of IMS with whom you have had dealings in the course of your last 18 months' of employment to terminate or not renew any contract they may have had with IMS.
Your obligations under this clause continue after your employment ends.
Each restraint contained in this clause constitutes a separate and independent provision, severable from the other restraints. If a court decides any such restraint to be unenforceable in whole or part, the enforceability of the remainder of that restraint and any other restraint shall not be affected."
Mr Inches' defence is that the restraint is void and unenforceable. Even if it is a valid restraint, Mr Inches' position is that IMS consented to him working at Worley Parsons; that his employment with Worley Parsons was not to any extent competitive with IMS; and that in any event, IMS did not suffer any loss.

Legal principles

A restraint of trade is "prima facie unenforceable as contrary to public policy": TSV Holdings v Evans & Anor [2008] VSC 157 [53]; and therefore void: Nordenfelt v Maxim Nordenfelt Guns & Ammunition Co Ltd [1894] AC 535 at 565.
Restraints are against public policy for being anti‑competitive and interfering with an individual's personal freedom to practice his or her own trade. The Court will only enforce restraints in the special circumstances of a particular case. The only justification for a restraint of trade is where it is reasonable "in reference to the interests of the parties concerned and reasonable to the interests of the public, so framed and so guarded as to afford adequate protection to the party in whose favour it is imposed, while at the same time … in no way injurious to the public": Nordenfelt (supra).

To be reasonable a restraint must be limited to what is reasonably necessary to protect the plaintiff's business at the time the contract is entered into: see Lindner v Murdock's Garage (1950) 83 CLR 628; Butt v Long (1953) 88 CLR 476, 486 per Dixon J; Amoco Australia Pty Ltd v Rocca Bros Motor Engineering Co Pty Ltd (1973) 133 CLR 288; Cream v Bushcolt Pty Ltd [2004] WASCA 82 at [20].
The restraint must offer no more than adequate protection of the legitimate interests of the party benefiting from the restraint: see Ausdale Enterprises Pty Ltd v Sandford [2006] WASCA 191, McLure JA at [10] (Steytler and Buss JJA concurring); Masterclass Enterprises Pty Ltd v Bedshed Franchisors (WA) Pty Ltd [2008] WASCA 67 at [87].
The person enforcing the restraint has the onus of proving its reasonableness: see Peters American Delicacy Co Ltd v Patricia's Chocolate & Candies Pty Ltd (1947) 77 CLR 574, Dixon J at 590; Cream v Bushcolt Pty Ltd (supra) at [29]. The onus of proving that the restraint injures the public interest is on the party restrained: Sear v Invocare Australia Pty Ltd [2007] WASC 30 at [34]. Mr Inches did not seek to prove that the restraint was against the public interest.
Ultimately, it is a matter of judgment for the trial judge after weighing the relative advantages and disadvantages of what has been agreed between the parties to decide whether a restraint is reasonable: Amoco (supra) at 296

The business of IMS

Mr Reynolds testified that IMS provides a range of services to the construction and mining industry ranging from industrial relations consultancy, health, management, training and specialised project services.
Clearly the business of IMS included engaging personnel for placement in a particular position with a client, as was the situation with Mr Inches.

Consideration of the restraint

There was no evidence whatsoever concerning the reason why IMS considered the restraint to be necessary to protect its business.
The subclause (a) restraint is limited to three named entities each of which had some association with Mr Inches' employment. However, as framed, this restraint includes a restraint from dealing with "to any extent competitive with IMS", any of the three entities in any capacity or for any person or entity. The business of IMS includes hiring out labour. It is virtually impossible to determine the extent of the reach of this subclause. The term "otherwise deal with" is too broadly framed to enable Mr Inches or any reasonable person to assess what conduct that purports to restrain. On its face, it could cover a wide range of conduct, behaviour, or direct or indirect contact. There is no geographical limitation. For these reasons this subclause is both unreasonable and void for uncertainty.
Subclause (b) is also extremely wide. It purports to restrain Mr Inches from soliciting the business of or otherwise dealing with any clients or customers of IMS with whom he had dealings in the course of the last 18 months employment with IMS. Again the phrase "otherwise deal with" is too wide. The word "dealings" is not defined. The categories of customers or clients are not specified. There is no geographical limitation. I am of the opinion that this restraint is also void for uncertainty, and in any event, goes beyond what is reasonably necessary to protect the business of IMS.
Subclause (c) has no geographical limitation. There is no time frame within which the clients or customers may have had contracts with IMS. Again, the word "dealings" is too vague and uncertain. This restraint is also void for uncertainty.
Further, the phrase "to any extent competitive with IMS" which governs each subclause is wide enough to include conduct which may be unconnected with Mr Inches' area of expertise. Therefore, it operates as an unreasonable restraint.
In my view, the restraints in each sub-clause effectively prevent Mr Inches from carrying out his employment in the IR or any field as they are too widely framed and it is unclear exactly what he is restrained from doing because of the vagueness of the language used. Wooten J in Austra Tanks Pty Ltd v Running (1982) 2 NSWLR 840 at 845 ‑ 846 described a restraint (in the context of a "step clause") as "malevolent" "… because it makes no genuine attempt to define the covenantee's real need for protection, gives the covenantor no clear guide as to what he can or cannot do, and refers the definition of the obligation to litigation …". In my view, the restraints IMS seeks to impose on Mr Inches have a similar effect.
In summary, I find that the restraints are void and unenforceable as being unreasonable and uncertain.

Was there consent?

I briefly consider Mr Inches' defence that IMS consented to his employment with Worley Parsons, because the issue is a factual one.
Mr Inches told Mr Reynolds as early as January 2008 that there was a possibility of employment with Worley Parsons in the future. I accept his evidence that he told Mr Reynolds that the project was due to end on 31 March 2008.
Mr Reynolds had no issue with Mr Inches working for Worley Parsons in the role as national IR manager because he could see opportunities for IMS. On the face of the terms of the restraint, even in a role of National IR Manager, Mr Inches would breach subclauses (a) and (b) unless he had the consent of IMS.
In my view, the email dated 13 March 2008, seen against the background of the discussion the two had, constituted Mr Reynolds' consent in writing to Mr Inches to take up employment with Worley Parsons. Mr Reynolds was aware of the restraint in the Inches/IMS contract and he had discussions with Mr Inches about the negotiations between Mr Inches and Worley Parsons without raising the issue of the restraint let alone voicing any objection.
The first time Mr Reynolds raised the restraint with Mr Inches was in his 28 May 2008 letter.
No other interpretation can be placed on the email dated 13 March 2008 other than Mr Reynolds was in effect consenting to Mr Inches taking up employment with Worley Parsons.

Damages

Although it not strictly necessary to do so, I consider the issue of IMS' damages if the restraint were held to be enforceable. IMS contends that it was deprived of the chance of placing Mr Inches with IMS and claims damages in the sum of the monthly fee it would have received had Mr Inches been placed with IMS (subject to contingencies).
I can deal with this shortly. The evidence establishes that Worley Parsons was not interested in dealing with IMS because of the fees it charged. Mr Inches was adamant that he did not want to work with IMS because of Mr Reynolds' attitude to him and his belief that Mr Reynolds had impugned his honesty and integrity. In those circumstances, the prospects of IMS employing Mr Inches and contracting with Worley Parsons to supply his services were so extremely unlikely that I find there was no loss of a chance to place Mr Inches with Worley Parsons. Accordingly, IMS has not proved that it has suffered any damage or loss.

Summary

I uphold Mr Inches' claim for payment of his completion bonus in the agreed sum of $61,611.92.
I uphold Mr Inches' claim for payment of the living away from home allowance in the agreed sum of $2,700.
I dismiss the counterclaim.
I shall hear from the parties as to interest and costs.