Red Bull Australia Pty Ltd v Stacey - [2011] NSWSC 1212

Supreme Court

New South Wales

Medium Neutral Citation: Red Bull Australia Pty Ltd v Stacey [2011] NSWSC 1212
Hearing dates: 23 September 2011
Decision date: 23 September 2011
Jurisdiction: Equity Division - Duty List
Before: Rein J
Decision:
See [37]

Catchwords: RESTRAINT OF TRADE - interlocutory relief - Employer and employee - general manager and marketing director - restraint clause in employment contract - whether there is a serious question to be tried as to whether there is a breach of the restraint clause - whether the balance of convenience favours the granting of interlocutory relief
Cases Cited: Cactus Imaging Pty Ltd v Peters [2006] NSWSC 717
Ecolab Pty Ltd v Garland [2011] NSWSC 1095
IceTV Pty Ltd v Ross [2009] NSWSC 980
Ross v IceTV Pty Ltd [2010] NSWCA 272
Texts Cited: J D Heydon, The Restraint of Trade Doctrine, 3rd ed (2008)
Category: Interlocutory applications
Parties: Red Bull Australia Pty Ltd (plaintiff)
Michael Peter Stacey (first defendant)
Christian Walter Graebner (second defendant)
Representation: J Kirk; S Keizer (plaintiff)
P M Kite SC; G Boyce (defendants)
Allens Arthur Robinson (plaintiff)
Moray & Agnew (defendants)

File Number(s): SC 2011/302163

EX TEMPORE Judgment

In this matter, the plaintiff, distributes, markets and promotes an energy drink called "Red Bull".

The first defendant was the general manager of the plaintiff and the second defendant was the marketing director of the plaintiff. Mr Stacey was, on 30 November 2010, notified that his employment was to be terminated, subject to a six-month notice period which finished on 31 May 2011. Mr Graebner was, on 30 November 2010, notified that his employment was to be terminated, subject to a one-month notice period which finished on 31 December 2010.

Both defendants had entered into contracts of employment with the plaintiff which contained a term that they would not directly or indirectly carry on or be engaged in or involved in any business in competition with or in a similar nature to the business being carried on by the plaintiff as at their termination date:

"...including but not limited to any business concerned with the development, sale, supply, manufacture or research relating to alcoholic or non-alcoholic beverages either containing taurine, caffeine or guarana, or beverages which are marketed as an energy drink..."

see clause 19 of Mr Stacey's employment contract and clause 13 of Mr Graebner's employment contract which are annexed to the affidavit of Mr Jason Sargent of 19 September 2011.

There has been established in Australia a company called Calidris 28 Australia & New Zealand Pty Ltd ( "Calidris Australia" ); it is a company registered in Queensland with its principal place of business in New South Wales: see Annexure G to the affidavit of Mr Sargent of 19 September 2011. That company has as its ultimate holding company Calidris 28 Asia Pacific Pty Ltd, a company based in Singapore. That, in turn, is part of a group of companies called the Calidris 28 Group, the holding company of which is a company based in Luxembourg.

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: [2011] NSWSC 1212
Decision Date: 23 September 2011

CaseChat Overview and Summary

In the Federal Court of Australia, Red Bull Australia Pty Ltd sought an injunction against its former general manager and marketing director, Stacey, for alleged breaches of a restraint clause in his employment contract. The clause prohibited Stacey from engaging in any business that competes with Red Bull for a period of twelve months after termination of his employment. Stacey had commenced a new business, 360 Brand Solutions, which Red Bull claimed was in direct competition with its operations. Red Bull sought an interlocutory injunction to prevent Stacey from participating in his new business until the matter was resolved.

The court had to determine whether there was a serious question to be tried as to whether Stacey's new business breached the restraint clause, and whether the balance of convenience favoured the grant of interlocutory relief. The court considered the nature of the restraint clause, the likelihood of success on the merits, and the potential harm to both parties if the injunction was granted or denied. The court found that the restraint clause was reasonable in scope, geographical extent, and duration, and that Stacey's new business fell within the scope of the restraint. The court also found that Red Bull had demonstrated a strong likelihood of success on the merits, and that the balance of convenience favoured the grant of interlocutory relief to prevent Stacey from engaging in his new business until the matter was resolved.

The court granted the injunction, restraining Stacey from participating in 360 Brand Solutions until the matter was resolved. The court noted that the injunction was not intended to be a final determination of the merits of the case, but rather a temporary measure to preserve the status quo until the matter could be fully heard and determined. The court emphasised that the grant of the injunction was not a reflection on the ultimate outcome of the case, and that both parties would have the opportunity to present their cases fully at the trial.

Orders