Nexus Energy Limited v Cottee
[2012] VSC 215
•24 May 2012
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL AND EQUITY DIVISION
S CI 2011 5469
| NEXUS ENERGY LIMITED (ACN 058 818 278) | Applicant |
| v | |
| RICHARD COTTEE | Respondent |
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JUDGE: | ALMOND J | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 26 April 2012 | |
DATE OF JUDGMENT: | 24 May 2012 | |
CASE MAY BE CITED AS: | Nexus Energy Limited v Cottee | |
MEDIUM NEUTRAL CITATION: | [2012] VSC 215 | |
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CONTRACT – Restraint of trade – Contract of employment – Post-employment restraint clause – Settlement agreement between the parties modifying the expiration date of the restraint period – Whether the respondent evinced an intention to not be bound by the settlement agreement – Whether the terms of the settlement agreement were otherwise breached – Applicant did not discharge burden of proof - Application dismissed.
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APPEARANCES: | Counsel | Solicitors |
| For the Applicant | Mr J L Bourke SC and Mr N A T Harrington | Maddocks |
| For the Respondent | Mr T J Walker | Gadens Lawyers |
HIS HONOUR:
From about May 2010 until his resignation in September 2011, Richard Cottee was employed as the Chief Executive Officer of Nexus Energy Limited (Nexus) pursuant to a written contract of employment.
After his resignation, Cottee commenced a proceeding against Nexus seeking among other things:
· a declaration that the contract of employment did not incorporate a schedule which contained a post-employment restraint; and
· a declaration that the post-employment restraint is void and unenforceable.
In November 2011, Nexus served on Cottee an offer of compromise of the proceeding which states:
1.Upon acceptance of this offer of compromise, the Defendant agrees that the covenants set out in clause 2 of the document entitled “SCHEDULE A Post-employment Restraints” will cease to have any operation, force or effect after 19 March 2012.
Schedule A relevantly provides:
1. Definitions
For the purposes of this Schedule A the following definitions apply:
Business means any business or activity which is the same as or similar to that undertaken by the company and which you are directly or indirectly involved with while employed by the Company.
Non-Competition Period means:
(a)Twelve months
(b)in the event that twelve months is held to be unreasonable, it shall instead be six months; or
(c)in the event that six months is held to be unreasonable, it shall instead be three months.
2. Post-employment Restraints
2.1In consideration of the salary you will receive and in order to reasonably protect the goodwill and the business of the Company, during the term of your employment with the Company and for the Non-Competition Period following the termination for any reason of your employment and within Australia, you may not, whether directly or indirectly, without the prior knowledge or consent of the Company:
(a)approach or accept any approach from a Client or Prospective Client with the view to soliciting Business from that Client or Prospective Client;
(b)seek to encourage an employee or sub-contractor of the Company to leave the Company or otherwise terminate the contract between the employer or sub-contractor and the Company;
(c)participate in, promote, carry on or otherwise be involved in, financially or otherwise as a member, shareholder, unit holder, financier, consultant, advisor, contractor, principal, agent, manager, employee, beneficiary, partner, associate, trustee or financier, any Business; or
(d)assist any other person, entity or organisation to perform any of the acts set out in paragraphs (a), (b) or (c).
…
Cottee accepted the offer of compromise. Following his acceptance, the parties sought an order by consent that the proceeding be discontinued.[1]
[1]Affidavit of Alisanne Ride sworn 18 April 2012 at [10].
Nexus complaint
On 24 January 2012, Austin Exploration Limited (Austin) made an announcement to the Australian Securities Exchange (“ASX”) that Cottee had been appointed as its non-executive chairman (effective 24 February 2012).[2]
[2]Affidavit of Susan Robutti sworn 19 April 2012 at [27] and Exhibit SR6 thereto.
By summons dated 19 April 2012, Nexus seeks an order pursuant to r 26.07(1) of the Supreme Court (General Civil Procedure) Rules 2005 that the discontinued proceeding should now be dismissed by reason of Cottee’s failure to comply with the terms of the accepted offer of compromise.
Rule 26.07(1) of the Supreme Court (General Civil Procedure) Rules 2005 relevantly provides:
(1) Where a party to an accepted offer of compromise fails to comply with the terms of the offer, then, unless for special cause the Court shall otherwise order, the other party shall be entitled, as that other party may elect, to—
...
(b) where the party in default is—
(i) the plaintiff, an order that the proceeding be dismissed; …
and… to judgment accordingly.[3]
[3]Supreme Court (General Civil Procedure) Rules 2005 (Vic) r 26.07(1).
Nexus also seeks an order in the circumstances that the summons for taxation of the plaintiff’s costs of the proceeding be struck out.[4]
[4]Supreme Court (General Civil Procedure) Rules 2005 (Vic) r 26.03(7).
Nexus contends that Cottee’s acceptance of the offer of compromise was not a true acceptance as Cottee did not recognise his obligations under the terms of the settlement agreement and otherwise breached the terms of the settlement agreement.
The following issues arise for determination:
(1)Did Cottee evince an intention not to be bound by the settlement agreement?
(2)Did Cottee otherwise breach the terms of the settlement agreement?
(1) Did Cottee evince an intention not to be bound by the settlement agreement?
Senior counsel for Nexus submitted that Cottee had refused to acknowledge that he was bound by the terms of the “Offer of Compromise”. Nexus relied in particular on an exchange of correspondence between solicitors for the respective parties and on Cottee’s alleged association with the promotion of Austin from about January 2012 prior to the expiration of the restraint period on 19 March 2012.
The exchange of correspondence
By a letter dated 3 February 2012, the solicitors for Nexus emailed a letter to the solicitors for Cottee attaching a copy of the ASX announcement of Cottee’s appointment as non-executive chairman. The letter relevantly states:
The Appointment is in breach of the Offer of Compromise dated 18 November 2011 for the following reasons.
Austin is self-described as an “Australian based” and publicly listed ‘Oil and Gas Company with both producing and exploring assets in Australia and the United States.’ Austin ‘has a Cooper Basin oil and gas prospect’ in PEL 105 Cooper Basin Pirie-1 Well Prospect surrounded by producing oil and gas fields.
Austin therefore carries on the ‘same or similar business or activity’ undertaken by Nexus as defined by the term “Business” in clause 1 of schedule A.
Your client’s conduct amounts to a breach of clauses 2.1(c) and (d) respectively of Schedule A on the basis that on 24 February 2012 (if not earlier), your client:
(a)as Austin’s Non-Executive Chairman and member of the Board will ‘participate in, promote, carry on or otherwise be involved, financially or otherwise’ in a range of capacities outlined in clause 2.1(c) including that of ‘beneficiary”, ‘advisor’, ‘principal’”, ‘any Business’; and
(b)will ‘assist’ Austin as a ‘organisation’ and/or ‘entity’ as well as Austin’s Directors and Board members ‘to perform any of the acts set out in paragraph (a), (b) or (c)’ of clause 2.1 of schedule A. The obligation on your client extends to assisting ‘any other person’.
Your client’s conduct in being involved with Austin, among other things, and appointment as Non-Executive Chairman of Austin, effective 24 February 2012, amounts to a flagrant breach of the Offer of Compromise which, as your client is aware, constitutes the very basis for settlement of the Supreme Court Proceedings No. SCI 2011/5469.
…
Our client therefore fully reserves its rights in respect of any loss and damage arising from your client’s breach.
Notwithstanding the above, and with a view to finalising this matter, our client would be prepared to agree to the effective date of the Appointment as 24 February 2012 subject to the requirement that each party bear its own costs in the proceedings.
Alternatively, our client requires that your client provide a written undertaking in terms acceptable to our client that he will not commence at Austin until 19 March 2012 and for an ASX Announcement to issue reflecting this change.
By letter dated 7 February 2012, Cottee’s solicitors responded as follows:
We agree with your assertion that upon our client’s acceptance of your client’s offer our client was bound by the terms of the Offer of Compromise.
Critically, the Offer of Compromise did not contain any compromise or concession by our client that the Post-employment Restraint (as defined in paragraph 5 of the Statement of Claim indorsed on the Writ dated 13 October 2011) was or is binding on him in the first instance. In fact, the denial is maintained.
Acceptance of the Offer of Compromise determines our client’s claim against your client.
Your client’s assertion that our client has breached the Post-employment Restraint comprised by its acceptance of the Offer of Compromise is disputed and respectfully, is nonsensical.
Nexus focused particularly on the following words in the reply from the solicitors for Cottee where the author states “the Offer of Compromise did not contain any compromise or concession by our client that the Post-Employment Restraint… was or is binding on him in the first instance. In fact, the denial is maintained” (the statement). It was submitted that the statement constitutes a refusal by Cottee to acknowledge that he was bound by the settlement agreement.
The relevant principles are well established and uncontentious. It may be accepted that a breach of contract by repudiation occurs when a party evinces an intention to no longer be bound by the contract or to fulfil it in a manner substantially inconsistent with the obligations under the contract.[5]
[5]G C Cheshire and C H S Fifoot, Law of Contract (Butterworths, 4th edition, 1981) 1013 [21.12]; Progressive Mailing House Pty Ltd v Tabali Pty Ltd (1984) 157 CLR 17, 33.
Words or conduct which indicate an unwillingness to perform the contract may constitute repudiation.[6] Repudiation of a contract is a serious matter and is not to be lightly found or inferred.[7]
[6]G C Cheshire and C H S Fifoot, Law of Contract (Butterworths, 4th edition, 1981) 1015 [21.12] and the cases there cited, eg Laurinda Pty Ltd v Capalaba Park Shopping Centre Pty Ltd (1989) 166 CLR 623, 647.
[7]Shevill v Builders Licensing Board (1981) 149 CLR 620, 633.
I am not persuaded that by making the statement Cottee evinced an intention not to be bound by the settlement agreement for the following reasons.
First, the statement is literally correct. The Offer of Compromise was expressed in terms which did not require the plaintiff to make any concession about the enforceability of the post-employment restraint. It states that the defendant (Nexus) agrees that the covenants (post-employment restraints) will cease to have any operation, force or effect after 19 March 2012. Cottee was entitled to assume from the terms of that offer that Nexus would no longer assert that the post-employment restraints applied to him after 19 March 2012. However, the Offer of Compromise did not contain any “compromise or concession” by Cottee in relation to the enforceability of the post-employment restraints, though his acceptance of the offer naturally involved a compromise of the litigation.
Secondly, counsel for Cottee accepted that under the terms of the settlement agreement (which arose on acceptance of the offer of compromise) the post-employment restraints with the restraint period expiring on 19 March 2012 are binding on Cottee. This was in contrast with the position adopted by Cottee in the proceeding in which he had alleged among other things that the post-employment restraints were not binding upon him on the basis that the contract of employment did not incorporate the post-employment restraint clause.[8] Counsel for Cottee submitted that by making the statement, Cottee was not denying that the post-employment restraints formed part of the settlement agreement; he was merely reserving the right to argue the enforceability and the extent of the operation of the restraints in response to the allegations of breach made by the solicitors for Nexus in their letter of 3 February 2012. I accept that this construction is open. Alternatively, when construed in its context, it is also open to conclude that the statement is a retrospective reference to the settled claim, akin to a statement that the settlement agreement is made with a denial of liability, and that the denial of liability under the post-employment restraint clause as it was originally framed is maintained. Either way, in my opinion when considered objectively the statement is not repudiatory of the settlement agreement.
[8]Refer to the first head of declaratory relief on page 7 of the statement of claim in the original proceeding.
Thirdly, in the letter the solicitors for Cottee expressly acknowledge that upon acceptance of the offer by Nexus, Cottee was bound by its terms and that acceptance of the offer of compromise determined the claim against Nexus.
Fourthly, the solicitors for Cottee deny that Cottee had breached the post-employment restraint comprised by acceptance of the offer of compromise. This statement is consistent with an implicit recognition of an obligation.
Further, I do not accept the proposition put by the applicant that the failure of Cottee to give the undertaking requested in the letter of 3 February 2012 indicates that Cottee did not consider himself bound by the settlement agreement. In my view, a mere failure to give the undertaking does not constitute repudiatory conduct. Whether there is repudiatory conduct in this case depends on Cottee’s conduct during the nominated restraint period, not on whether he declined to give a requested undertaking. In any event, I note that Nexus asked for a written undertaking “in terms acceptable to our client” without stating precisely what terms would have been acceptable to their client. This would have necessitated further correspondence.
For these reasons, in my opinion Cottee does not, through the agency of his solicitors, in correspondence or by his conduct in “declining” to provide an undertaking, evince an intention not to be bound by the settlement agreement. As to whether he does so by other conduct overlaps with the other allegations of breach which are dealt with below.
(2) Did Cottee otherwise breach the terms of the settlement agreement?
Senior counsel for Nexus submitted that Cottee had breached the settlement agreement. He relied on:
(a)a copy of an announcement made to the ASX on 24 January 2012 to the effect that Cottee would be joining the board of directors of Austin as non-executive director effective 24 February 2012;[9]
(b)the contents of an article published in The Australian Financial Review on 24 January 2012 that states among other things that Cottee had “resurfaced as non-executive chairman of Austin”;[10]
(c)the contents of an article published in The Australian Financial Review on 25 January 2012 that stated among other things that Cottee would join Austin on 21 February 2012 “five months after his exit from Nexus”. This article attributes statements to Cottee along the lines that the legal action he launched in October 2011 over clauses in his employment contract that had restricted him from taking up a new job for six months had been resolved and the statement “that’s all been settled and liberty has been restored”;[11]
(d)the contents of a document entitled Investor Presentation dated 20 February 2012 which states that it had “been prepared in relation to the significant capital raising the company is undertaking”. In this document, the description of the board and management include a reference to Cottee as chairman with a footnoted qualification “effective 22 March 2012”;[12] and
(e)“information” received from two board members of Nexus that Cottee ”had participated with the capital raising activities for Austin on or around 20 February 2012”.[13]
[9]Affidavit of Susan Robutti sworn 19 April 2012 at [27] and Exhibit SR6 thereto.
[10]Affidavit of Susan Robutti sworn 19 April 2012 at [25] and Exhibit SR5 thereto.
[11]Affidavit of Susan Robutti sworn 19 April 2012 at [29] and Exhibit SR8 thereto.
[12]Affidavit of Susan Robutti sworn 19 April 2012 at [32] and Exhibit SR8 thereto.
[13]Affidavit of Susan Robutti sworn 19 April 2012 at [35].
Senior counsel for Nexus relied on the references in the media, the ASX announcement, the articles in The Australian Financial Review and the Investor Presentation document presented to the market place by Austin as part of its capital raising strategy to support the argument made out in the correspondence that Cottee’s conduct amounted to a breach of clauses 2.1(c) and 2.1(d) of the post-employment restraints.
Through his counsel, Cottee opposed the application solely on the basis that on its material, the applicant failed to prove a breach of the terms of the settlement agreement. He elected not to argue the question of the validity of the restraint clause. By taking this course, I apprehend that Cottee was not abandoning the question of validity at large should it later become relevant.
Post-employment restraints of trade
In substance, Cottee submitted that the post-employment restraints are by nature non-competition clauses and must be construed in light of that object; and that accordingly, it is axiomatic that the definition of “Business”, namely “any business or activity which is the same as or similar to that undertaken by the company…“ must be concerned with the market in which the company competes.[14] Counsel for Cottee relied on the Court of Appeal decision of Birdanco Nominees Pty Ltd v Money where Robson AJA (with whom Maxwell P and Redlich JA agreed) said that a covenant in restraint of trade must be construed: [15]
(a)in accordance with the natural and ordinary meaning of its words;[16]
(b)with reference to the object sought to be obtained;[17] and
(c)in a business fashion, not in its wider possible dictionary meaning but in the way in which business people would interpret it when used in relation to a business matter of the relevant kind.[18]
[14]Clause 1 of the Post-Employment Restraints.
[15][2012] VSCA 64, 13-14 [37]-[39].
[16]Birdanco Nominees Pty Ltd v Money [2012] VSCA 64, 13 [37]; McMahon v National Foods Milk Ltd (2009) 25 VR 251, 277 [54].
[17]Birdanco Nominees Pty Ltd v Money [2012] VSCA 64, 13 [37]; Littlewoods Organisation Ltd v Harris [1977] 1 WLR 1472, 1481 (Lord Denning MR); see also Courtenay Polymers Pty Ltd v Deang [2005] VSC 318, 31 [99]-[101] (Whelan J).
[18]Birdanco Nominees Pty Ltd v Money [2012] VSCA 64, 13-14 [39], Southland Frozen Meat and Produce Export Company Ltd v Nelson Brothers Ltd [1898] AC 442, 444.
I note that the stated purpose of the post-employment restraints in this case is to reasonably protect the goodwill and the business of the company (Nexus).[19] Were it not so, the clause would impose greater protection than could be justified.[20] This would raise the issue of reasonableness of the restraint and its validity. For the sake of the argument, I assume validity though I express no view on the question.
[19]Clause 2.1 of the Post-Employment Restraints.
[20]Amoco Australia Pty Ltd v Rocca Bros Motor Engineering Co Pty Ltd (1973) 133 CLR 288, 306.
In relation to the alleged breach of clause 2.1(c), the solicitors for Nexus allege in their letter of 3 February 2012 that Cottee’s role as “Non-Executive Chairman and member of the Board” was a breach of clause 2.1(c) and identified three capacities in particular, namely “beneficiary”, “advisor” and “principal”.
Counsel for Cottee submitted that none of the capacities listed (namely member, shareholder, unit holder, financier, consultant, advisor, contractor, principal, agent, manager, employee, beneficiary, partner, associate, trustee or financier) apply with respect to Cottee’s acceptance of an appointment as a director of Austin and the appointment as the non-executive chairman and on this footing there is no breach of clause 2.1(c). I accept this submission. In my opinion it is noteworthy that “director” is not included in the list of prohibited capacities and I infer that such an obvious omission was intentional.
Despite the initial focus on an alleged breach of clause 2.1(c) in correspondence, the applicant only faintly pressed the case for breach of clause 2.1(c) in argument. Instead, the argument focused on a purported breach of clause 2.1(d) based on the allegation that Cottee assisted a person, entity or organisation to perform some of the acts set out in the restraint clause, including acts set out in clause 2.1(c).
Opinion evidence
Counsel for Cottee objected to statements of opinion in Ms Robutti’s affidavit based on her purported “knowledge of the oil and gas market” that both Nexus and Austin “engage in the similar or same activities in the oil and gas market”. He relied on s 76 of the Evidence Act 2008 which provides that evidence of an opinion is not admissible to prove the existence of a fact about the existence of which the opinion was expressed.[21]
[21]Evidence Act 2008 (Vic) s 76 (subject to specific exceptions which are not relevant here).
I uphold the objection. Save for her job description as General Manager Corporate Services and Company Secretary of Nexus, there is nothing in Ms Robutti’s affidavit to indicate her level of experience in the oil and gas industry. Importantly, there is no evidence to suggest that Ms Robutti is qualified to express the opinion that Nexus and Austin engage in the same or similar activities in the oil and gas market. Accordingly, the opinion is inadmissible and I disregard it.
Breach of the terms of the settlement agreement
In order to establish a breach of clause 2.1(d) the applicant must prove that Cottee assisted either Austin or any other person, organisation or entity to participate in, promote, carry on or otherwise be involved in,
any business or activity which is the same as or similar to that undertaken by the Company…
It follows that unless the applicant proves that the business or activity undertaken by Austin is the same as or similar to that undertaken by Nexus, the post-employment restraint clause does not engage and the application must fail.
Business or activity
On this issue, Ms Robutti deposes that Nexus is a Melbourne based ASX listed oil and gas company with subsidiaries and related bodies corporate;[22] that Nexus is a mid sized operator in the oil and gas industry and its operations revolve around three classes of oil and gas assets including production, development and exploration and appraisal assets; and that key assets of the company are the Longtom Gas Project (in the Basin off the south-east coast of Gippsland, Victoria) the Crux asset (in the Browse Basin, off the north-west coast of Western Australia) and the Echuca Shoals Asset (Browse Basin Western Australia). Ms Robutti describes Nexus’s current business activities and operations as follows:
(a)maintaining production of its gas assets at the Longtom gas project;
(b)exploring further volumes associated with its Longtom gas assets;
(c)commercialisation of the Crux field and continued exploration; and
(d)appraisal in its permit for oil and gas at the Echuca Shoals field.
[22]Affidavit of Susan Robutti sworn 19 April 2012 at [3]-[6].
Ms Robutti deposes that Nexus’s future involves the enhancement of its domestic gas assets and the commercialisation of its offshore gas and condensate assets in the Browse Basin and that over the last 12 months Nexus’s corporate focus has been the commercialisation of the Crux asset.[23]
[23] Ms Robutti deposes in more detail in relation to the producing asset (the Longtom gas project) the development asset (Crux) and the exploration asset (Echuca Shoals). It is not necessary to elaborate on this evidence.
In relation to Austin, Ms Robutti deposes that Austin is an Australian based and publicly listed oil and gas company with both production and exploration assets in Australia and the United States; that Austin has a Cooper Basin oil and gas project surrounded by producing oil and gas fields; that Austin currently maintains working interests and net revenue interests in five key oil and gas assets in Australia and the United States, including a 50% share in the PEL 105 Prospect in the Cooper Basin in an area of 437 square kilometres located approximately 60 kilometres north of Moomba in South Australia with joint venture partner and operator Beach Energy;[24] and that both companies pursue oil and gas exploration opportunities in Australia.
[24]Affidavit of Susan Robutti sworn 19 April 2012 at [35]-[38].
On the basis of the evidence in Ms Robutti’s affidavit, the applicant submits that Austin engages in the same or similar business or activity as Nexus.
The respondent takes issue on this point.
In an affidavit relied on in opposition to the application, Cottee deposes that he has been a resources executive for over 20 years; that his experience includes coal power generation, coal seam gas and his tenure as managing director of Nexus. He deposes that Nexus Energy is an offshore gas explorer and producer with offshore operations in Victoria and Western Australia. He deposes that Nexus does not and to the best of his knowledge has never explored for or produced oil and gas on land.[25]
[25]Affidavit of Richard Cottee sworn 24 April 2012 at [3]-[5].
Cottee deposes that Austin is an onshore oil and gas explorer and producer specialising in oil shale; that Austin has active projects in the United States of America including Texas, Colorado, Mississippi and Kentucky and does not have any active tenements in Australia; that it does have a non-active interest in the Cooper Basin tenement PEL 105; that this tenement in currently “suspended” due to long term flooding and it is unlawful for any production work to be undertaken in respect of that site until certain steps are taken; and that the next $1.75 million of expenditure on that tenement is the responsibility of Beach Energy. Cottee deposes that it is his understanding and belief that Austin did not pursue, either directly or indirectly, oil and gas exploration opportunities in Australia during the period 5 December 2011 (the date of acceptance of the offer of compromise) to 22 March 2012 (the date upon which he was appointed as a non-executive director of Austin).[26] Cottee also deposes that the central management, control and substantive assets of Austin are all located in the United States of America.[27] In an announcement to the ASX on 22 February 2012, Austin refers to having shifted its core focus towards non-conventional shale exploration in the United States of America. [28]
[26]Affidavit of Richard Cottee sworn 24 April 2012 at [6]-[9].
[27]Affidavit of Richard Cottee sworn 24 April 2012 at [15].
[28]Exhibit RC3 to the Affidavit of Richard Cottee sworn 24 April 2012.
Mr David Nairn, the Company Secretary of Austin, deposes that Austin is in the business of onshore oil and gas exploration and production and does not undertake offshore oil and gas exploration; that Austin undertakes its exploration and production business in the United States of America; and does not have any active oil or gas production or exploration interests in Australia, either in the supply of natural gas and liquids to Australian markets or for export from Australia to markets elsewhere. Mr Nairn deposes that the sole interest that Austin has in Australia is a 50% interest in petroleum export licence PEL 105 in South Australia that is not presently active and that Austin is not required to and therefore will not be taking any steps in respect of that tenement until after Austin’s partner Beach Energy has spent over $1.75 million on the project. Mr Nairn deposes that Austin has not and does not compete with the business of Nexus.[29]
[29]Affidavit of David Nairn sworn 24 April 2012 at [2]-[5].
I am required to construe the restraint clause with reference to its stated object (i.e. to reasonably protect the goodwill of the business of the company) and in a way which business people in the oil and gas industry would interpret it when used in relation to business or activity within that industry.
On the material before me there is evidence that Austin’s business or activity is conducted almost entirely in the United States of America. Nexus’s business or activity is conducted entirely in Australia. Austin’s business or activity is concerned solely with onshore activity. Nexus’s business or activity is concerned solely with offshore activity. Mr Nairn asserts that Austin has not and does not compete with the business of Nexus. He was not cross-examined on this evidence which I accept at face value. Nexus’s business or activity appears to be focussed on the conventional oil and gas sector whereas Austin’s business or activity appears to be focussed on the non-conventional oil and gas sector. These factors tend to suggest dissimilarity in the business and activities undertaken by the respective parties. On the other hand, Ms Robutti asserts that both companies pursue oil and gas exploration opportunities in Australia which tends to suggest that the entities do engage in the same or similar business or activity.
As things stand there is competing lay evidence on the key issue to be determined. In my opinion there is no reason to prefer Ms Robutti’s evidence over the evidence of Mr Cottee and Mr Nairn. Ms Robutti says nothing of her qualifications or experience in her affidavit from which I could draw appropriate inferences in answering the question. There is no cogent evidence in support of the application which would enable me to construe the restraint clause in a business fashion in the way in which business people would interpret it when used in relation to the business or activity in issue.
In the circumstances, I am not satisfied on the balance of probabilities that the business or activity of Austin is “the same as or similar to” that undertaken by Nexus. Indeed there are compelling indications that the business or activity is dissimilar although I make no finding on this issue. Accordingly, the application must be dismissed.
I will hear counsel on the question of costs.
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