LCA Traralgon Pty Ltd v Johnson Pty Ltd - [2024] VSC 612

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE
COMMON LAW DIVISION
EMPLOYMENT AND INDUSTRIAL LIST

S ECI 2024 04169

BETWEEN:

LCA TRARALGON PTY LTD (ACN 632 445 660)	Plaintiff
v
ASHLEE JOHNSON PTY LTD & ORS (according to the attached Schedule)	Defendants

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JUDGE	Ierodiaconou AsJ
WHERE HELD:	Melbourne
DATE OF HEARING:	2 October 2024
DATE OF RULING:	7 October 2024
CASE MAY BE CITED AS:	LCA Traralgon Pty Ltd v Johnson Pty Ltd
MEDIUM NEUTRAL CITATION:	[2024] VSC 612

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EMPLOYMENT – Contract – Restraint of trade – Legitimate protection of interests – Client connections – Restraints of Trade Act 1976 (NSW) s 4 – Application in Victoria.

INJUNCTION – Interlocutory injunction – Significance of delay in bringing an application where notice of a prospective injunction application has been provided.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr G A Pauline	Norton Rose Fulbright Australia
For the First and Second Defendants	Mr M J Hoyne	Pointon Partners Pty Ltd

TABLE OF CONTENTS

Introduction........................................................................................................................................ 1

Summary.............................................................................................................................................. 1

Background......................................................................................................................................... 1

Applicable Principles – interlocutory injunctions...................................................................... 6

Application of Restraints of Trade Act 1976 (NSW).................................................................... 8

The restraints.................................................................................................................................... 12

Is there a serious issue to be tried?............................................................................................... 14

Whether the alleged breaches infringe the terms of the restraint and non-solicitation clauses................................................................................................... 14
Whether the restraint and non-solicitation clauses are contrary to public policy 15

Are damages an adequate remedy?.............................................................................................. 21

Balance of convenience................................................................................................................... 22

Delay................................................................................................................................................... 23

Undertaking as to damages............................................................................................................ 24

Conclusion......................................................................................................................................... 25

HER HONOUR

Introduction

The plaintiff seeks an interlocutory injunction to enforce restraint clauses in its contract with the first defendant and a deed poll with the second defendant. The injunction is opposed.

Summary

I will grant an interlocutory injunction, subject to the usual undertaking as to damages.

Background

The plaintiff carries on a business franchise known to the public as Laser Clinics Australia. Relevantly, a branch of that business carries out its practice at 81-89 Hotham Street, Traralgon, Victoria (‘plaintiff’s premises’).

The plaintiff provides laser hair removal and skin and non-surgical cosmetic injection treatments.

The first defendant, Ashlee Johnson Pty Ltd (‘AJPL’), is an independent contractor who provides injector cosmetic treatments.[1]
[1]Affidavit of Danielle Daniel, sworn on 17 September 2024 (‘Daniel affidavit’), [23].

The second defendant, Ashlee Johnson, is the sole director of the first defendant; she is a registered nurse who provides injection treatments.

The third defendant, known as Haven Aesthetics Gippsland, operates approximately 250 metres away from the plaintiff’s premises.[2] The third defendant played no active part in this application.
[2]Daniel affidavit, [42].

For shorthand, I shall collectively refer to the first and second defendants in this ruling as ‘the defendants’.

On 8 July 2019, the plaintiff engaged the first defendant as an independent contractor by contractor agreement.[3]
[3]Affidavit of Alexandra Shields, affirmed 17 September 2024 (‘Shields affidavit’), [7](b).

Per cl 4 of the contractor agreement, the second defendant was obliged to provide the Injecting Services and complete the jobs allocated by the plaintiff. The agreement provided that the first defendant was paid for the…

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: [2024] VSC 612
Decision Date: 7 October 2024

CaseChat Overview and Summary

LCA Traralgon Pty Ltd brought an action against Johnson Pty Ltd in the Supreme Court of Victoria, seeking relief on the basis of a breach of contract and an interloculatory injunction to prevent the respondent from using the applicant’s confidential information and client connections. The respondent, Johnson Pty Ltd, had hired an employee from the applicant, LCA Traralgon Pty Ltd, and was alleged to be using confidential information and client connections obtained during their prior employment with the applicant. The applicant argued that the restraint of trade clause in the employee’s contract was valid and enforceable under the Restraints of Trade Act 1976 (NSW) s 4, and sought an interloculatory injunction to prevent further breaches.

The court was required to determine whether the restraint of trade clause in the employee’s contract was valid and enforceable, and whether an interlocutory injunction should be granted to prevent the respondent from using confidential information and client connections obtained during their prior employment with the applicant. The court also had to consider the impact of the delay in bringing the application and the notice of a prospective injunction application provided to the respondent.

The court found that the restraint of trade clause in the employee’s contract was valid and enforceable under the Restraints of Trade Act 1976 (NSW) s 4, and that the respondent had breached the clause by using confidential information and client connections obtained during their prior employment with the applicant. The court also found that the delay in bringing the application was significant, but did not preclude the grant of an interlocutory injunction. The court considered the notice of a prospective injunction application provided to the respondent and found that it did not amount to an abuse of process. The court ultimately granted the interlocutory injunction sought by the applicant, restraining the respondent from using confidential information and client connections obtained during their prior employment with the applicant.

The court ordered that Johnson Pty Ltd refrain from using confidential information and client connections obtained during their prior employment with LCA Traralgon Pty Ltd. The court also ordered that Johnson Pty Ltd pay costs of the application. The court found that the delay in bringing the application was significant, but did not preclude the grant of an interlocutory injunction. The court also found that the notice of a prospective injunction application provided to the respondent did not amount to an abuse of process.

Orders