Libra Financial Services Pty Ltd v Statham
[2011] QDC 34
•8 March 2011
[2011] QDC 34
DISTRICT COURT
CIVIL JURISDICTION
JUDGE JONES
No 583 of 2011
| LIBRA FINANCIAL SERVICES PTY LTD | Applicant |
| and | |
| JOHN THOMAS STATHAM | Defendant |
BRISBANE
..DATE 08/03/2011
ORDER
HIS HONOUR: This is an application for declaratory relief. The relief sought is in these terms: a declaration that;
a) Those clients of the applicant who are referred to as, "John's clients" in item 4 of the schedule to the contract for employment entered into between the applicant and the respondent on or about 1 July 2002 (contract) remain to be clients of the applicant.
b) Clause 22.1 of the contract prohibits the respondent from contacting any of the persons referred to as John's clients in item 4 of the schedule of the contract.
I will come back to the terms of the relief sought in a moment.
At the beginning of these proceedings I raised the issue of whether or not this Court had the jurisdiction to grant the relief sought. The application before the Court is an originating application but there are no other proceedings before the Court and this caused me some concern having regard to section 69, subsection (2) of The District Court of Queensland Act.
Mr Steele contended that the Court did have jurisdiction and referred me to section 68(1)(b)(13) of the District Court of Queensland Act 1967 in support of that contention.
Ms Chappell did not take issue and also submitted that the Court had jurisdiction.
Of course, jurisdiction cannot be conferred even with the consent of the parties but on balance I am sufficiently satisfied that I have jurisdiction to deal with the matter and I think it is in the interests of the parties that I do so.
At the heart of the application are the submissions of Mr Steele to the effect that there was a causal connection between the cessation of the employment of the respondent and the sale of the business.
Those events become relevant under clause 15 of the contract. Clause 15(1) provides, "Upon the cessation of the employment of the employee other than upon the sale of the business conducted by the company ‘John's clients’ shall be dealt with in one of the following ways with the company and the employee to agree upon such way;
a) The employee shall be entitled to have ‘John's clients’ or those remaining at the time of cessation of employment transferred back to him provided that such transfer does not disadvantage the company or Elders Securities Limited or such transfer is not in breach of any reasonable restriction imposed by Elders Security Limited or;
b) The company may purchase John's clients or those remaining at the time of the cessation of employment in accordance with the following formula."
The formula is then set out and clause 15.2 goes on to provide, "Provided, however, that if the employee is in breach of the agreement under paragraph 17 and the employee is ceasing employment as a result of the breach then the calculation made in accordance with paragraph 15(1)(b) shall be reduced by an amount at the discretion of the company to compensate the company for such breach."
Mr Steele relies on the fact that on 30 November 2010 the applicant sold, effectively, the business to a third party, IPEC. On 21 January 2011 the respondent tendered his resignation. The letter of resignation gives one month's notice consistent with the terms of the contract. However, it also points out that the respondent understood that his employment would otherwise terminate upon the transfer of the business pursuant to the contract of sale to which I have referred. That was to occur on 7 February 2011.
Relying on that relationship of time and consequence, Mr Steele submits that the termination of employment was such as to make clause 15 of the contract inoperable or of no relevance.
I am not satisfied that that is the effect of clause 15 for a number of reasons including that, in my view, it could not be said with any certainty that the factual circumstances surrounding the resignation of the respondent would fall within the description “upon the cessation of the employment of the employee other than upon the sale of the business conducted by the company.” The respondent’s resignation which was to take effect after the contract for the sale of the business was concluded, being 7 or 21 February 2011, did not in my view constitute cessation of employment “upon” the sale of the business.
It also appears to me that the construction contended for by Mr Steele would have the unusual - if I can put it that way, consequences of the respondent being entitled to be remunerated in circumstances where he was in breach of the terms of his contract of employment pursuant to clause 15.2 of the contract but would not otherwise be entitled to any remuneration or benefit where there was the causal relationship between cessation of employment and the sale of the business.
Arguably, that should really dispose of the entirety of the application because as Mr Steele acknowledged the declaratory relief sought in subparagraph (b) to which I have referred really depended on the applicant successfully convincing me of the operation and effect of clause 15 of the contract.
That must be so at least in part because pursuant to clause 22.1 of the contract which is the clause upon which subparagraph (4) or the declaratory relief sought is based, refers to the situation of circumstances where the employee retained ‘John's clients’ or part thereof. Clause 22.1 of the contract notes that in such circumstances this clause would not apply to those clients.
There are other issues were raised against the declaration under clause (b). Many of those have merit including the fact that it is is arguably too wide in terms. And, notwithstanding the submissions made by Mr Steele that it is really a declaration about the terms of the contract that I am concerned with, I still consider that arguments of the type raised by Ms Chappell would still be open.
Leaving aside that the relief sought is in respect of ‘John’s clients’ (which must be intended to be other than the actual persons themselves - for example a client list) I am not satisfied that the application, since the sale of the business to IPEC, has any interest, let alone an enforceable interest, in those clients. Arguably, since the sale of the business the interest in those clients, if it does not lie with the respondent, lies with IPEC.
Other matters were raised including the fact that the relief sought was too wide in terms particularly in respect of subparagraph (b) where no time limit was placed. I do not consider that would have prevented me from granting the declaratory relief sought if I had - been otherwise convinced that it was appropriate to make the declarations sought.
Finally, as Ms Chappell pointed out, it has not been pointed out that there is a degree of urgency associated with this application which would require relief in the terms sought being made. Or to put it another way why the usual conduct associated with civil proceedings should not otherwise be complied with. For these reasons the application is refused and I will hear from the parties as to costs.
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HIS HONOUR: The order should be that - sorry, for the reasons given I am not prepared to grant the relief sought. The application should be adjourned‑‑‑‑‑
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HIS HONOUR: Well, then, the final orders will be in the terms of the draft and as I said I will reserve the right to tidy up my ex tempore reasons but they will otherwise be available on the website if anyone is interested within a few days.
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