Roberts Research Group Pty Ltd v Pyra
[2008] VSC 16
•11 February 2008
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL AND EQUITY DIVISION
No. 4509 of 2008
| ROBERTS RESEARCH GROUP PTY LTD | Plaintiff |
| v | |
| CHRIS PYRA | Defendant |
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JUDGE: | Mandie J | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 8 February 2008 | |
DATE OF JUDGMENT: | 11 February 2008 | |
CASE MAY BE CITED AS: | Roberts Research Group Pty Ltd v Pyra | |
MEDIUM NEUTRAL CITATION: | [2008] VSC 16 | |
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CONTRACT – restraint of trade – application for interlocutory injunction
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr J Bourke | Clayton Utz |
| For the Defendant | Mr R Dalton | TressCox Lawyers |
HIS HONOUR:
By summons filed 5 February 2008 the plaintiff sought an injunction until 1 February 2009, or further order, restraining the defendant from providing services or assistance as an employee, consultant, agent or howsoever otherwise to Telstra Corporation Limited. This application was opposed by the defendant. At the conclusion of the hearing I ordered that the plaintiff’s application should be dismissed and said that I would give my reasons later. These are those reasons.
The defendant (“Mr Pyra”) was an employee of the plaintiff (“Roberts Research”) from 21 May 2007 until 1 February 2008. In anticipation of such employment a Deed entitled “Employee Confidentiality, Privacy and Intellectual Property Deed” and dated 12 April 2007 was executed between Roberts Research and Mr Pyra.
Clause 6.2 of the Deed provided, so far as relevant:
“ During the Restraint Period[1], the Employee must not, in the Restraint Area:[2]
…
(b) engage in, be involved in or be associated with, a business competeing with the business of any Customer:
(i) with whom the Employee had contact in the course of their employment with the Employer; or
(ii) who disclosed information to the Employer in the course of the Business, and that information was also disclosed [to] the Employee and that information would be Confidential Information under this Deed if it belonged to the Employer…”.
[1]The maximum restraint period as defined is 12 months but the agreement contains a series of alternatives for lesser periods.
[2]Nothing turns on the definition of Restraint Area.
At all relevant times Optus was and is a major customer of Roberts Research and, during the course of his employment, Mr Pyra undoubtedly had contact with Optus – indeed it appears to be uncontested that Optus was the main customer of Roberts Research with whom Mr Pyra had contact during the course of his employment. Mr Pyra now proposes to enter employment with Telstra which is of course a major competitor of Optus.
Thus it is clear that Mr Pyra, by taking employment with Telstra, intends to act in breach of cl. 6.2(b)(i) of the Deed. The plaintiff further contends that Optus disclosed information to Roberts Research, and that information was also disclosed to Mr Pyra, and that such information would be confidential information as defined by the Deed if it belonged to Roberts Research. Thus the plaintiff contends that, by taking employment with Telstra, Mr Pyra will also be acting in breach of cl. 6.2(b)(ii) of the Deed. Mr Bourke of Counsel for Roberts Research emphasised that the primary bases upon which the injunction was sought were these threatened breaches of cl.6.2 of the Deed. A further cause of action, based upon the threatened misuse of confidential information, was also relied upon.
It was common ground, in accordance with well accepted and understood legal principle, that the restraints of trade contained in cl.6.2 of the Deed were prima facie void and that the onus lay upon the plaintiff to establish that, at the time the deed was entered into, the restraints were reasonable in the interests of the parties and of the public. Of course, generally speaking, for the purposes of an interlocutory injunction, the plaintiff need only establish that there is a serious question to be tried but where, as here, the determination of the interlocutory application is likely to determine the outcome of the proceeding[3] it is, it seems to me, incumbent upon the plaintiff to show a case of some strength that the restraints were reasonable.
[3]Because the 12 months restraint is likely to have totally, or at least substantially, expired before a trial could be held and decided.
Mr Dalton of Counsel for Mr Pyra submitted that the restraints contained in cl.6.2 of the Deed were manifestly too wide and unreasonable. Mr Bourke contended that Mr Dalton’s submissions placed a strained and artificial interpretation upon the provisions of the Deed and that the restraints were neither too wide nor unreasonable.
Mr Dalton submitted, in relation to cl. 6.2(b)(i) of the Deed, that the restraint was unreasonable because it prevented the employee from being involved with any business competing with a customer of Roberts Research simply because the employee had had “contact” with such customer. The contact might have been fleeting or of no significance and the contact might have been many years before the termination of the employee’s employment with Roberts Research. I accept that submission. In my opinion the nexus between the employee and the customer is so widely expressed as to constitute an unreasonable restraint. The mere contact of the employee with a customer of Roberts Research at any time during his employment does not, in my view, provide a reasonable justification for preventing the employee during 12 months after the termination of his employment with Roberts Research becoming involved with a competitor of that customer. At any rate, I do not think that the plaintiff’s case on this limb is of sufficient strength to justify the granting of an interlocutory injunction.
Mr Dalton submitted that the restraint contained in cl. 6.2(b)(ii) was also clearly unreasonable having regard both to the definition of Confidential Information and also to the fact that there was no requirement that the disclosure of the information should have occurred within a reasonable time of the employee’s termination of employment with Roberts Research. Mr Dalton referred to the breadth of the definition of Confidential Information contained in the Deed.[4] I also accept that submission. In my opinion the mere disclosure by a customer of Roberts Research of some piece of confidential information (within the very broad definition of the Deed) at any time during the employee’s employment by Roberts Research does not provide a reasonable justification for the restraint imposed. At any rate I do not think that the plaintiff’s case on this aspect is of sufficient strength to justify the granting of an interlocutory injunction on this basis.
[4]See cl.1 of the Deed.
There is a further reason for rejecting the plaintiff’s case based upon cl.6.2(b)(ii) of the Deed. I am not satisfied on the material that there is a serious question to be tried as to Optus having disclosed to Mr Pyra any such confidential information as defined. I think that Mr Dalton was right in his submission that, despite the extensive affidavit material filed on behalf of the plaintiff, the material failed to identify with any or any sufficient specificity any confidential information that Optus had disclosed to Mr Pyra during the course of his employment by Roberts Research.
For the foregoing reasons, I think that the primary basis put forward for the plaintiff’s application fails because the plaintiff has failed to show that there is a serious question to be tried or, at any rate, the plaintiff has failed to demonstrate a case of sufficient strength that would justify the prevention of the plaintiff from taking up employment with Telstra and leaving him to his remedy in damages, should the plaintiff ultimately fail in this proceeding.
In the alternative, the plaintiff contended that Mr Pyra should be restrained from taking up employment with Telstra because he was likely, consciously or unconsciously, to disclose to Telstra confidential information of Roberts Research (or of Optus) that he had obtained during the course of his employment with Roberts Research. Again, I think that Mr Dalton was right when he submitted that the plaintiff’s extensive material had failed to identify with sufficient specificity or at all the nature of that confidential information so as to permit of it to be the subject of an appropriate order. Mr Bourke pointed out that, because of the difficulty in proving that confidential information had been disclosed to a subsequent employer, some decided cases supported the granting of an injunction preventing the employment itself rather than simply the disclosure of the information. That is no doubt so but that approach does not justify disregarding the necessity to identify what the confidential information is and this the plaintiff, in my view, has failed to do. At best, in a number of paragraphs in Mr Roberts’ affidavit there is a very vague and unsatisfactory description of the alleged confidential information and little if any material to suggest that it would have any continuing value to a competitor.
Nor am I satisfied on the material that there is a serious question to be tried as to any likelihood that Mr Pyra would or might disclose significant or any confidential information to Telstra.
In reaching the above conclusions, I have taken into account the balance of convenience which, although it does not go all one way, is probably to some extent in favour of the plaintiff. In particular, I recognise that damages would be unlikely to be an adequate remedy for the plaintiff whereas, for the defendant, damages would go a long way towards redressing any loss suffered if an injunction were granted. Notwithstanding that, the insufficiency of the plaintiff’s case is such that, as I have endeavoured to state, in all the circumstances justice does not in my opinion require that the interlocutory injunction sought be granted but rather that the application should be refused.
For the foregoing reasons the summons was dismissed with costs.
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