SAI Global Property Division Pty Ltd v Jones

[2018] NSWSC 438

Supreme Court

New South Wales

• Amendment notes

Medium Neutral Citation:

SAI Global Property Division Pty Ltd (ACN 089 586 872) v Jones & Ors [2018] NSWSC 438

Hearing dates:

9 & 12 March 2018

Date of orders:

11 April 2018

Decision date:

13 April 2018

Jurisdiction:

Equity - Duty List

Before:

Slattery J

Decision:

See paragraph 157; application dismissed.

Catchwords:

EMPLOYMENT – Interlocutory injunction – the first defendant/employee leaves his employment with the plaintiff – the plaintiff and the second and third defendants are companies all operating in the IT industry – the first defendant initially proposes to work for the second defendant, a direct competitor of the plaintiff – the first defendant then changes course and signs an employment agreement with third defendant – the employment agreement between the plaintiff and the first defendant contains a restraint on a former employee working for “a competitor” for up to 12 months after the termination of his employment – an issue for final hearing is whether the first defendant’s proposed employment with the third defendant is employment with a “competitor” of the plaintiff within the meaning of the employment contract – whether there is a serious question to be tried – what is the balance of convenience in the circumstances.

Legislation Cited:

Supreme Court Act 1970 (NSW), s 66(4)
Restraints of Trade Act 1976 (NSW), s 4

Cases Cited:

Australian Broadcasting Corporation v O’Neill (2006) 227 CLR 57; [2006] HCA 46
Australian Broadcasting Corporation v Lenah Game Meats Pty Ltd (2001) 208 CLR 199; [2001] HCA 63
Beecham Group Ltd v Bristol Laboratories Pty Ltd (1968) 118 CLR 618
Beese v Woodhouse [1970] 1 All ER 769; [1970] 1 WLR 586
Buckley v Tutty (1971) 125 CLR 353; [1971] HCA 71
DP World Sydney Limited v Guy [2016] NSWSC 1072
Francome v Mirror Group Newspapers Ltd [1984] 2 All ER 408; [1984] 1 WLR 892
John Fairfax Publications Pty Ltd v Birt [2006] NSWSC 995
Kearney v Crepaldi & Ors [2006] NSWSC 23
Kolback Securities Ltd v Epoch Mining NL (1987) 8 NSWLR 533
McCarty v Council of the Municipality of North Sydney (1918) 18 SR (NSW) 210
Metcash Ltd v Joao Lewis Jardin [No 3] 2010 NSWSC 1096
Stacks/Taree Pty Ltd v Marshall (No 2) [2010] NSWSC 77
Veda Advantage (Australia) Pty Ltd v de Beer [2016] NSWSC 37
Woolworths Limited v Mark Konrad Olson (2004) NSWCA 372

Texts Cited:

JD Heydon, MJ Leeming and PG Turner, Meagher, Gummow & Lehane’s Equity: Doctrines & Remedies (5th ed 2014, LexisNexis Butterworths) at [21–350]

Category:

Procedural and other rulings

Parties:

Plaintiff: SAI Global Property Division Pty Ltd (ACN 089 586 872)
First Defendant: Richard Jones
Second Defendant: InfoTrack Pty Ltd (ACN 092 724 251)
Third Defendant: Perfect Portal (Australia) Pty Ltd (ACN 105 662 557)

Representation:

Counsel:

 

Plaintiff: J. Hennessy SC; C. McMeniman   
First to Third Defendants: A. Moses SC, Y. Shariff; V. Bulut

   

Solicitors:

  Plaintiff: Michael Williams, Gilbert + Tobin
First to Third Defendants: Abraham Leon Ash, Clayton Utz

File Number(s):

2018/71769

Publication restriction:

No

Judgment

1. The plaintiff, SAI Global Property Division Pty Limited (“SAI Global Property”), decided not to continue its 18 month employment of its executive, Mr Richard Jones, the first defendant, beyond 6 February 2018. Shortly after leaving SAI Global Property on 6 February this year, Mr Jones indicated an intention to commence work with SAI Global Property’s competitor InfoTrack Pty Limited (“InfoTrack”), the second defendant.

2. SAI Global Property threatened to enforce an employment restraint against Mr Jones, if he worked for a competitor, such as InfoTrack. In response Mr Jones took employment with a related company of InfoTrack, Perfect Portal Pty Limited (“Perfect Portal”). SAI Global Property now seeks an interlocutory injunction to restrain Mr Jones from working either for Perfect Portal, the third defendant, or InfoTrack, the second defendant, until final hearing.

3. The defendants, Mr Jones, InfoTrack and Perfect Portal, have offered undertakings not to solicit suppliers and customers of SAI Global Property and related undertakings. They resist the interlocutory relief sought. They debate that there is a serious question to be tried. But they contend that after all their undertakings are taken into account, the case for further relief at final hearing is very weak. They submit that at a final hearing it will be established clearly on the available evidence that Perfect Portal will be shown not to be a direct competitor of SAI Global Property, and even if it is, that the restraints sought to be enforced will be found to be unreasonable and unenforceable.

4. Mr J. Hennessy SC and Mr C. McMeniman of counsel appeared for the plaintiff, instructed by Michael Williams of Gilbert + Tobin. Mr A Moses SC, Mr Y. Shariff and Ms V. Bulut of counsel appeared for the first, second and third defendants, instructed by Abraham Leon Ash of Clayton Utz.

5. These interlocutory proceedings first came before me for directions on 7 March 2018, to assist the Duty Judge, Kunc J, who had a full list of urgent matters. The directions given that day included giving the parties the option to contest the following day, 8 March, whether they wanted a final hearing in the matter on 9 March if they could be ready in time. In the result, neither party were in a position to prepare for final hearing. So the proceedings were heard on Friday, 9 March and briefly on Monday, 12 March 2018 on an interlocutory basis. Further post-hearing directions were made for the filing of supplementary written submissions on 16 March 2018 in relation to the issue of how far Perfect Portal’s services were integrated into InfoTrack’s service offering, in such a way as they might compete directly with SAI Global Property’s service offering. On that date the Court also extended Kunc J’s orders to the time by which it was then anticipated interlocutory judgment would be given, 21 March 2018.

6. But disputes broke out between the parties as to the extent of the written submissions that could be made. So, the matter was also relisted for a short supplementary hearing on 19 March 2018. At that 19 March hearing, further directions were made permitting additional written submissions by 22 March. They parties availed themselves of the right to put on additional submissions.

7. The interlocutory relief the plaintiff seeks is in prayers for relief 1 and 2 of the Summons:

(1)   An order that the First Defendant is restrained:

(a)   until further order or such other date as the Court determines; and

(b)   within Australia or such other area as the Court determines,

from engaging in any way as an employee, independent contractor, director, officer, agent or partner with:

(c)   the Second Defendant;

(d)   the Third Defendant; and

(e)   any “Related Body Corporate” (as that term is defined in the Corporations Act 2001 (Cth)) of InfoTrack or Perfect Portal.

(2)   An order that the Second Defendant and the Third Defendant are restrained from inducing the First Defendant to breach the order set out in prayer 1.

8. Despite its detail and its intensity, this is only an interlocutory hearing. The limits of such a hearing must be stated at the outset.

The Court’s Task On This Interlocutory Hearing

9. The Court has power to grant interlocutory injunctions under Supreme Court Act 1970, s 66(4), on terms if necessary, in any case where “it appears to the Court to be just or convenient”. The Court must consider whether the plaintiff’s case presents a serious question to be tried and whether the balance of convenience, hardship, and related factors warrant the grant of an interlocutory injunction.

10. This is an interlocutory hearing, not a final hearing. The Court will seek to arrange the earliest possible final hearing for these parties and has ordered that it proceed into the expedition list for that purpose. In the meantime, the Court’s task is not to undertake a preliminary trial and to either give or withhold interlocutory relief upon some forecast as to the ultimate result of the factual dispute between the parties. But the relative strengths of the parties’ cases are not irrelevant to the exercise of the Court’s discretion.

11. The Court’s task on an interlocutory hearing such as this one was well expressed by the English Court of Appeal in the appellate context in Francome v Mirror Group Newspapers Ltd [1984] 2 All ER 408; [1984] 1 WLR 892; (1984) 81 LSG 2225; (1984) 128 SJ 484 when Sir John Donaldson MR said (at 894H – 895A):

“The defendants now appeal. It is of paramount importance that everyone should understand the exercise upon which the judge was, and we are, engaged. There is to be a speedy trial at which the rights of the parties will be determined. That has not yet happened. We are concerned, so far as we can, to preserve the rights of the parties meanwhile. It is not our function to decide questions of fact or law which will be in issue at the trial. If they are arguable, that is the time and the place when they should be argued.”

12. Later in the same judgment his Lordship further explained the Court’s duty in following terms (at 898E-898G):

“What then should we do? I stress, once again, that we are not at this stage concerned to determine the final rights of the parties. Our duty is to make such orders, if any, as are appropriate pending the trial of the action. It is sometimes said that this involves a weighing of the balance of convenience. This is an unfortunate expression. Our business is justice, not convenience. We can and must disregard fanciful claims by either party. Subject to that, we must contemplate the possibility that either party may succeed and must do our best to ensure that nothing occurs pending the trial which will prejudice his rights. Since the parties are usually asserting wholly inconsistent claims, this is difficult, but we have to do our best. In so doing, we are seeking a balance of justice, not of convenience.”

13. These reasons now set out a narrative of some facts relevant to the interlocutory issues. In such an interlocutory hearing the Court’s reasons cannot encompass all the relevant facts, particularly in a matter with the complexities of this one. But because the Court has decided in these reasons to discharge the existing interlocutory injunction and because of the inherent complexity of the issues in this matter, these reasons are considerably larger than would be expected after such an interlocutory hearing. Except where the facts are uncontentious, the Court’s narrative below should only be understood, and is mostly expressed, as a forecast of the kind of evidence that each party proposes to adduce at a final hearing.

Mr Jones Moves From SAI Global Property To Perfect Portal – 2016 to 2018

14. On 9 May 2016 Mr Jones commenced employment with SAI Global Property in the position of “Head of Segment & Strategic Sales” in the company’s property division in its sales department located in Sydney. He commenced on a total remuneration package with a value of $158,775 per annum, including superannuation and annual leave loading. On top of that package value he was entitled to participate in a Short Term Incentive (STI) performance bonus scheme.

15. The employment agreement was signed on behalf of the plaintiff on 3 May 2016 and by Mr Jones on 4 May and came into force on 9 May. The employment agreement contained unremarkable terms in clauses 1 – 21 as to many matters: Mr Jones’ standard of performance of his duties, his reporting and supervisory functions, his location and hours of work, a probationary period of employment, superannuation, salary reviews, the use of a corporate credit card and mobile phone, procedures for reimbursement of expenditures, provisions for leave and health and medical fitness, damage to or a loss of company property, and privacy. The employment agreement also provided limits on the employee’s other interests, engagements, and activities (clause 23) and bound the employee to abide by the company’s policies, procedures, and codes of conduct (clause 24).

16. The employment agreement provided (clause 28) that the employee and the employer could give each other four weeks’ notice of termination of the agreement and additionally, the employer could terminate for cause without notice on the grounds of serious misconduct, gross negligence, or other conduct significantly undermining the trust and confidence of the employer in the employee.

17. The two terms of the agreement debated between the parties were clauses 22 and 27. These contain protections for SAI Global Property’s confidential information (clause 22) and post-employment restraints on Mr Jones (clause 27). Clause 22 provided as follows:

“22   CONFIDENTIALITY OF COMPANY INFORMATION & CONFLICTS OF INTEREST

22.1   The Employee will not, either during their employment with the Employer or after the termination of it, divulge, share or use any confidential information about the Employer or its affairs without the prior written consent of the Chief Executive Officer of the Employer.

22.2   Confidential information about the Employer includes, but is not limited to, all trade and business secrets and any information of a commercial, operational, technical or financial type which is not publicly available, relating to the affairs or business of the Employer or its customers.

22.3   The Employee will not publish or cause to be published any part of any work performed by the Employee whilst employed by the Employer, including (without limitation) any reports or papers, without the prior written consent of the Chief Executive Officer of the Employer. The Employee will not, either during or after their employment by the Employer create, make copies of or permit use of any written material, documents, records, papers, disks relating to the business or activities of the Employer, for any purpose other than the proper execution of the Employer's business.

22.4   The Employee agrees to disclose to the Employer any discovery or invention or improvement in procedure or design made or discovered by the Employee during their employment in connection with or in any way affecting or relating to the business of the Employer.

22.5   Any discovery or invention or improvement in procedure or design made or discovered by the Employee during their employment in connection with or in any way affecting or relating to the business of the Employer, or capable of being used or adapted for use by the Employer, will belong to and be the absolute property of the Employer.

22.6   The Employee shall not during their employment accept or undertake to accept either directly or indirectly any gifts, commissions or other favour of any kind whatsoever in connection with their work without the prior written consent of the Employer.

22.7   Any breach of the above terms by the Employee during their employment will constitute serious misconduct for which the Employee may be summarily dismissed.”

18. The issues at final hearing will directly concern the construction and operation of clause 27 of the employment agreement. Clause 27 contemplates a post-employment restraint of periods up to 12 months. But SAI Global Property indicated in the course of the hearing that it does not seek to enforce such a restraint beyond a period of six months. Clause 27 provides as follows:

“27   POST EMPLOYMENT RESTRAINTS

27.1    In order to protect the Confidential Information and goodwill of the Company, during the Restraint Period, after termination of the Employee's employment for any reason, the Employee must not, anywhere in the Restraint Area, directly or indirectly.

(a)   Engage in any way, including as an employee, independent contractor, director, officer, agent or partner, or prepare to engage in, a business that competes with the Company;

(b)   without the express prior written consent of the Company, individually or on behalf of any other person, corporation, firm or other entity, solicit the business of, or deal with any Client of the Company or any subsidiary, or known prospective Clients of the Company, other than on behalf of the Company or in relation to business not conducted or proposed to be conducted by the Company or any subsidiary of the Company, at the time of such solicitation;

(c)   interfere with the relationship between the Company and the Company's Clients, employees or suppliers, or

(d)   without the express prior written consent of the Company, individually or on behalf of any other person, corporation, firm or other entity, solicit or encourage any employee of the Company or any subsidiary of the Company to terminate his or her employment with the Company or such subsidiary.

27.2   In this clause:

(a)   Client means any person, firm or company who at any time during the period of 12 months prior to the termination of the Employee's employment was a client of the Company in respect of the part or parts of the business in which the Employee was employed;

(b)   Restraint Period means the period of:

(i)   12 months;

(ii)   6 months; and

(ii)   3 months.

(c)   Restraint Area means the area of:

(i)   Australia;

(ii) New South Wales; and

(iii) Sydney.

(d)   Confidential Information has the meaning as set out at clause 22 of this Agreement.

(e)   For the avoidance of any doubt, Infotrack Pty Ltd, Global X

Information Pty Ltd and Veda Advantage Ltd are examples of businesses that compete with the Company for the purposes of clause 27.1(a).

27.3   Each of the above Restraint Periods and Restraint Areas is a separate and independent obligation. In the event that one or more of the Restraint Areas or Restraint Periods are found to be unenforceable, the remaining Restraint Areas or Restraint Periods will continue to apply.

27.4   The Employee acknowledges that each restriction specified in this clause is in the circumstances reasonable and necessary to protect the Company's legitimate interests.

27.5   The Employee acknowledges that they may be liable in damages (including punitive or special damages) arising out of the breach of any of the covenants of this Agreement, including without limiting the generality of the foregoing, the covenant set out in this clause above.

27.6   The Employee acknowledges and agrees that a breach of the covenant set out in this clause would result in irreparable harm to the Company, and damages may be insufficient.

27.7   The Employee has been given a reasonable opportunity to obtain advice about this covenant and the obligations and restraints contained in it.”

19. Clause 27.2(e) identifies that the second defendant, InfoTrack, is an example of a business that competes directly with SAI Global Property.

20. Mr Jones’ employment with the plaintiff came to an end by mutual agreement on 6 February 2018 when Mr Jones and SAI Global Property executed a deed of mutual release. Aspects of that February 2018 release deed are relevant to the issues presently before the Court.

Mr Jones’ Performance At and Departure From SAI Global Property

21. Mr de Polignac, Head of Sales Australia for SAI Global Property, a senior member of staff to whom Mr Jones reported, says that he became concerned about Mr Jones’ performance in his role in late 2017 and that Mr Jones’ team was not performing well and not meeting its sales targets. In January 2018 he had a conversation with Mr Jones about whether he had concealed personal entertainment expenditure on a credit card statement. Mr Jones disputes that he concealed anything from the plaintiff.

22. Mr de Polignac was also critical of Mr Jones taking his team out for social drinks from 4pm on Friday afternoons. Mr de Polignac says he met Mr Jones in December 2017 to discuss management aspects of his role. There is a dispute between them about what was said.

23. Finally, Mr de Polignac says that on 5 February 2018 he raised his concerns about Mr Jones’ performance again and offered that he could leave with two months pay or be performance managed which Mr de Polignac thought was unlikely to be successful. Mr Jones has quite a different version of the conversation, as only arising out of one of his weekly meetings with Mr de Polignac, when a number of allegations were raised with him for the first time. Mr Jones says that Mr de Polignac gave him little choice but to leave. Mr Jones is emphatic that at no stage has any issue of trustworthiness been raised with him by Mr de Polignac.

21. None of these contests can be resolved within an interlocutory hearing. But it can perhaps be observed that there is no compelling objective proof of a misuse of funds or of a trustworthiness issue. But the plaintiff was dissatisfied with Mr Jones and, on either version of the conversation of 5 February 2018, really wanted to let him go. And that is what happened.

22. This is not a case where any allegation has been made that Mr Jones took any customer related information in any form, or took any artificial steps to prime his memory about confidential aspects about the plaintiff’s business.

Mr Jones Obtains New Employment

26. 6 February 2018 was Mr Jones’ last day of employment with SAI Global Property. Mr Jones initiated contact with InfoTrack very quickly thereafter. SAI Global Property says that Mr Jones initiating this contact and the course of it is a reason why interlocutory relief should be extended.

27. SAI Global Property’s Notices to Produce elicited documents that showed Mr Jones sent a text message to Mr Graham McKean, the Talent Acquisition Manager at InfoTrack, on 8 February 2018, which included the statements, “just wondered if you… guys have any suitable roles up there? I’m obviously still under an non-complete clause in my contract but thought I would ask the question anyway”. In my view this was a reasonably tentative inquiry. It disclosed the non-compete clause to InfoTrack at the outset.

28. It is not a clear breach of clause 27.1(a) to make this inquiry. But by the time this inquiry had gone further, InfoTrack was contending that the restraint clause was unenforceable. The plaintiff’s case seemed to be that the mere contact was problematical on discretionary grounds for all the defendants. But in my view that is not so.

29. Mr Jones and Mr McKean continued their correspondence by text message and email up until 16 February 2018.

30. But by then the contact had come to the plaintiff’s attention. On 16 February 2018 Gilbert + Tobin wrote to Mr Jones reminding him of his clause 27 post-employment restraints and his clause 22 confidentiality obligations. The plaintiff then required a written undertaking by 21 February 2018 that Mr Jones would comply with these restraints. This letter declared SAI Global Property “has reason to believe that you may shortly be commencing employment with InfoTrack”. This was said to be based on “credible information that you made a disclosure to this effect to an SAI Global employee”.

31. In response Mr Jones indicated he would reply to the letter by 23 February 2018 and confirm, as was the fact, that he had neither commenced employment nor signed a contract with InfoTrack.

32. Between 18 and 22 February the issue of Mr Jones’ potential employment by SAI Global Property was elevated to Ms Yvonne Hirons, the CEO of Perfect Portal.

33. On 18 February 2018 Mr Steven Wood, a Senior Executive at InfoTrack in Australia, emailed Ms Hirons and received replies from her in the following terms. Mr Wood initiated the email discussion by suggesting that to replace a departing sales manager his “two options” were another former InfoTrack employee and Mr Jones, “who until recently headed up sales for SAI, our main competitor”. Ms Hirons responded that in the context of whether a new Sales Manager was required that “I agree. We need someone who is strong…” and asked about the possible availability of both the other person and Mr Jones. Mr Wood replied to Ms Hirons, “Richard is available immediately”, and that he was being interviewed. Mr Wood concluded his email saying “Either way we are hiring him, whether it’s InfoTrack, Tickle or PP”. “PP” refers to Perfect Portal. Ms Hirons then responded, all still within the day, suggesting that Mr Wood should speak to Mr Jones and commented “That’s exciting”.

34. InfoTrack’s HR Manager sent Mr Jones an employment contract with InfoTrack, which Mr Jones executed on 22 February. Ms Fiona Crawford, General Manager of Human Resources, signed on behalf of InfoTrack.

35. SAI Global Property makes the point in its final submissions that this contract with InfoTrack was not disclosed in the affidavit evidence and was only produced under the Notice to Produce.

36. That somewhat overstates the position. On 23 February 2018 Mr Jones wrote to Messrs Gilbert + Tobin, the lawyers for the plaintiff, disclosing, “I have now decided to commence employment with InfoTrack, but I am still considering, when I will commence employment. I‘m bringing this to SAI Global’s attention so that I am being honest and transparent”. Whilst the actual contract of employment was not disclosed, it is not in issue that Mr Jones did not actually start work with InfoTrack before any reply came from the plaintiff. Mr Jones’ letter of 23 February 2018 can be seen as an invitation to SAI Global Property to declare its position about whether he could take up such employment.

37. The Jones/InfoTrack employment agreement of 22 February 2018 does not contain an actual start date. In it Mr Jones warrants that he is “not under any restriction which would interfere or conflict with [his] employment” in the role of Sales Manager for InfoTrack. But it is obvious from the information already disclosed by them to InfoTrack that there was an existing restraint and it may be inferred that is the reason why Mr Jones, undoubtedly with InfoTrack’s knowledge, sent the letter of 23 February 2018 to the plaintiff.

38. In my view this situation is far less sinister than the plaintiff seeks to make out. By signing and preparing to sign the InfoTrack agreement, Mr Jones would be in breach of the restraint, if it were enforceable. But he was making clear at the same time to his former employer that he was not commencing the proposed employment until he had heard from the former employer. And he has not in fact commenced such employment, before the issue of the enforceability of the clause 27.1(a) restraint is resolved.

39. SAI Global Property replied to Mr Jones’ 23 February 2018 letter seeking confirmation by 2 March 2018 that Mr Jones would comply with the restraints and reserving its rights. Gilbert + Tobin’s letter of 28 February 2018 explained the reason that the clause 27.1(a) restraint was being enforced, as follows:

“Protection of SAI Global's legitimate business interests

You were employed by SAI Global as the Head of Segment & Strategic Sales. We are instructed that in the 21 months you were employed in this role you had responsibility for the management of significant customer accounts, including acting as the interface between SAI Global and account managers of major SAI Global clients. We are also instructed that you had extensive access to confidential information relating to major customer accounts and to a wider range of SAI Global's confidential information including in relation to its products, financial data, and business strategies.

The responsibilities involved in you carrying out your role were identified at the time you signed your Employment Contract. That document described your role as "a senior management role within sales" and identified it as involving the following responsibilities (inter alia):

h   "Collate and analyse financial, sales and business data, including sales automation data, to make informed decisions and direct the effort of a sales team to achieve business targets",

"Provide support in the development of bid strategies for relevant tenders and strategic and major accounts opportunities",

"Develop and expand relationships with key stakeholders within strategic and major accounts to identify new opportunities to sell SAI Global Property products and services in conjunction with sales consultants",

"Maintain accurate records through Salesforce and other CRM systems to ensure a thorough understanding of market segments and sales team performance against targets", and

"Leverage relationships with industry partners to maximise sales opportunities for SAI Global”.”

40. The plaintiff’s 28 February 2018 letter was in sufficiently strong terms that it caused InfoTrack not to proceed with the 22 February agreement. Mr Wood in a letter sent to the plaintiff on 2 March 2018 disclosed that Mr Jones would not commence employment with InfoTrack but instead would be employed by Perfect Portal.

41. This gave advance notice of that proposed employment to the plaintiff. InfoTrack’s 2 March 2018 letter contended that the restraints identified were not valid and enforceable as to their width, scope and duration and indicated that, “InfoTrack will take appropriate measures to ensure that the undertakings given by [Mr Jones and others persons] will be honoured”. InfoTrack made clear that it would ensure that Mr Jones would not be put in a position where he would be required to solicit the work of former clients of the plaintiff or deal with them for six months or breach his confidentiality undertakings; and that he would be counselled “not to do so”.

42. InfoTrack’s 2 March 2018 letter confirmed that Mr Jones had accepted employment with Perfect Portal and then set out that in his role at Perfect Portal Mr Jones would not undertake any of many identified activities, which then became the subject of the Jones/Perfect Portal employment agreement referred to below.

43. After the disputes the subject of these proceedings arose, on 23 February 2018 the plaintiff gave written undertakings to the plaintiff, which were in substance that he would not divulge, share or use any confidential information about the plaintiff or its affairs (as defined in the employment contract) without the plaintiff’s written consent, in terms that were in substance the same as clause 22 of the employment agreement. He also offered to agree for a period of six months from the date of termination of his employment with the plaintiff to undertake in substance in the terms of clause 27.1(b) and (d) of the employment agreement. He confirmed those undertakings in writing on 2 March 2018 in a slightly clearer, re-stated form as follows:

“12.   I have undertaken to the Plaintiff that I will:

a.   not divulge, share or use any Confidential Information (as defined in my employment contract) about the Plaintiff or its affairs without the prior written consent of the CEO of the plaintiff;

b.   not create, makes copies of or permit use of any written material, documents, records, papers, disks relating to the business or activities of the Plaintiff;

c.   for a period of six (6) months from the date of the termination of my employment with the Plaintiff:

i.   not solicit the business of, accept the business of, or deal with, any of the Plaintiff’s client with whom I dealt during the last 12 months of my employment with the Plaintiff;

ii.   not interfere with the relationship between the Plaintiff and its employees or suppliers; and

iii.   not solicit the business of, accept the business of, or deal with, any prospective client of the Plaintiff with whom I dealt during the last 12 months of my employment with the Plaintiff (collectively, the Undertakings).”

44. Almost one calendar month after leaving SAI Global Property on 5 March 2018, Mr Jones signed a contract of employment with Perfect Portal to take up the position as its National Sales Manager. That Perfect Portal employment agreement provided for the plaintiff’s employment to commence on 6 March 2018. But once SAI Global Property launched these proceedings Mr Jones agreed on a without admissions basis not to commence with Perfect Portal until 9 March 2018.

45. The 5 March 2018 employment agreement with Perfect Portal is unremarkable except for a term that is clearly crafted in contemplation of the emerging dispute with the plaintiff. It requires strict compliance by Mr Jones with certain representations InfoTrack had made to the plaintiff, providing as follows:

“Your previous employment at SAI Global Property Pty Limited

It is an essential term of this contract that you strictly comply with the representations which InfoTrack Ltd has made to SAI Global Property Pty Limited (SAI Global) regarding your employment with Perfect Portal, which are that you will not:

(a)   be responsible for the sale or promotion of any products or services that are the same as any products or services offered by SAI Global in the part of the business in which you worked, or at all;

(b)   have any direct or indirect reports who are responsible for the sale or promotion of an y products are services that are the same as any products or services offered by SAI Global in the part of the business in which you worked, or at all;

(c)   report to any person who is responsible for the sale or promotion of any products or services that are the same as any products or services offered by SAI Global in the part of the business in which you worked, or at all;

(d)   be involved with product or service development of any product or service that is the same as any products or services offered by SAI Global in the part of the business in which you worked, or at all;

(e)   be involved with pricing products or services that are the same as any products or services offered by SAI Global in the part of the business in which you worked, or at all;

(f)   be involved in the sale or marketing strategy or plans of any products or services that are the same as any products or services offered by SAI Global in the part of the business in which you worked, or at all;

(g)   have any direct or indirect reports who are involved in any of the activities set out about at (d) to (f); nor

(h)   be soliciting or dealing with any clients of SAI Global for whom you have provided undertakings.

It is also an essential term of this contract that you do not breach any undertaking you have given to SAI Global.”

Mr Jones at SAI Global Property

46. Mr Jones’ background is in general sales with some experience in the legal industry. Prior to commencing his role with SAI Global Property he did not have experience in the information brokerage industry. Understanding the structure of Mr Jones’ working relationships within SAI Global Property is important background to an analysis of the issues.

47. Mr Jones initially managed a sales team focusing on legal, media, and government clients. Other sales teams dealt with other sectors excluding banking and then another sales team dealt with banking. By July last year, the sales organisation was restructured geographically rather than by sector of the economy. Mr Jones was allocated the North sector which included the Australian Capital Territory, New South Wales, the Northern Territory, and Queensland. The South sector was allocated elsewhere. Banking continued to have its own separate team. Under these arrangements Mr Jones dealt with all industries, even beyond legal, media, and government clients. But he did not deal with banking.

48. Mr Jones both supervised junior staff and reported to more senior staff. As already explained in these reasons, Mr Jones reported to Mr de Polignac, Head of Sales Australia for SAI Global Property, who oversaw both the North and South sales teams. Mr de Polignac in turn reported to Mr David Katz, the plaintiff’s Commercial Director, who in turn reported Ms Kim Jenkins, the Chief Executive Officer. Mr de Polignac, Mr Katz, and Ms Jenkins had responsibilities for the plaintiff’s total property and knowledge divisions.

49. Mr Jones managed a number of different reporting subordinates, or “reports”, in the department that existed from 1 July 2017. These included the Key Account Managers assigned to the larger clients, and who were responsible for selling products and services to these larger clients and were available to solve any issues that arose with them. Next, he managed Account Managers who fulfilled the same role that the Key Account Managers did for the larger clients but who were assigned to smaller clients. The next group Mr Jones managed were Inside Sales Representatives, who were assigned to very small clients (businesses that had six or less employees). These representatives worked as the title implies, in house within the SAI Global Property, addressing client queries by telephone and providing periodic relationship support.

50. Finally Mr Jones managed another group charged with expanding SAI Global Property’s customer base, Business Development Managers, with the remit to search for new clients, and Business Development Executives who performed a similar role but searched for smaller clients.

51. Within the team reporting to Mr Jones there were typically ten employees, two Key Account Managers, one Account Manager, one Inside Sales Representative, five Business Development Managers, and one Business Development Executive.

52. Mr Jones’ role as Head of Segment and Strategic Sales gave him primary responsibility for: training new sales employees and mentoring them to keep clients satisfied; up-skilling his direct reporting subordinates in sales techniques and training; supervising his direct subordinate reports, by ensuring they put in place the sales training skills he was imparting to them; ensuring that his team met budget; providing assistance and guidance to team members with respect to client management; relationship management; and counselling underperforming direct reports.

53. But Mr Jones says that he did not have responsibility for a wide range of matters concerning IT product development including: developing products by way of code programming; understanding the technical aspects of products including underlying software coding; setting price points for pricing structures; determining the standard terms and conditions offered to clients; or directly managing client relationships. There is a contest in the evidence as to his exposure to direct client relationships, to which these reasons will return.

54. The matters for which Mr Jones did not have responsibility were managed by other teams and divisions including: a Sales Enablement Team; a Product Division, whose role was to develop code and refine products and services; the Senior Executives and Finance Managers, who determined and set budgets and established price points for customers; and a Legal Function, that developed standard terms and conditions provided to clients.

55. Mr Jones was not part of SAI Global Property’s Executive Leadership Team. He says he did not attend any Executive Leadership meetings. There is evidence to the contrary from the plaintiff that he had a greater involvement in the formulation of the plaintiff’s strategy that he admits but it is not in contest that he did not regularly attend and participate in Executive Leadership meetings.

56. Mr Jones says he was not directly responsible for determining the content of contracts with clients or for negotiating them. Generally, the plaintiff has a standard set of terms and conditions developed by the plaintiff’s Legal Team, which are engaged when its products are used by clients online. But these terms and conditions are publically available to clients and potential clients.

The SAI Global Property Product Offering

57. The issue for final hearing of whether or not Perfect Portal is “a business that competes with [SAI Global Property]” requires an understanding of the plaintiff’s main product offering in the field in which Mr Jones works.

58. The plaintiff’s principal product offerings relevant to the matters in issue are online services known as Search Manager, Conveyancing Manager, Settlement Room, and Conveyancing Directory. The online capability of each of these products is to be compared and contrasted with the capability of products InfoTrack offers, Smokeball and LEAP, and the service that Perfect Portal operates.

59. The plaintiff’s Search Manager product enables public sources of information held by regulators and other public bodies such as ASIC and the PPSR to be searched to obtain the information that a SAI Global Property client wants. This type of information is usually called “authority data”, referring to its source in such external government agencies.

60. To use Search Manager, SAI Global Property’s clients create an account for Search Manager online and are charged a fee per search depending on the authority selected. The Search Manager platform also offers data virtualisation, to present more complex data in a visual format. The tool used to do this is called “Encompass”.

57. The fees charged to clients using Search Manager are publically available information and are divided into the fees charged by the authority itself and the additional service fees paid to the plaintiff for using Search Manager.

58. The plaintiff offers discounted search fees. Mr Jones says that the discount is client-specific. Mr Jones says he did have access to information about the amount of the discounts but he did not retain it. There are currently over 7,500 clients who may use Search Manager and the range of searches to which a discount might apply is very broad. The SAI Global Property website itself claims the Search Manager provides “access [to] over 7,660 products from more than 3,270 sources through one application”. As a matter of ordinary human memory capacity, Mr Jones is unlikely to retain since 6 February, much recall of individual discounts for individual clients, but he could perhaps be expected to remember the discounts for some of the more significant clients and the principles that the plaintiff applied in reaching discounts.

59. SAI Global Property also offers a subscription service entitled Conveyancing Manager, which is an IT platform described best in the plaintiff’s own words: “our unique, diary-based workflow solution, conveyancing manager, helps conveyancers and solicitors build efficiencies and scalability into their conveyancing operations and make the conveyancing process seamless, faster, flexible and more secure”.

60. Conveyancing Manager does this in the following way. A subscriber pays an annual fee for using Conveyancing Manager which is essentially an IT system supporting conveyancing or legal practices which undertake conveyancing work. The software is designed to manage the workflow specifically to facilitate efficient conveyancing work.

61. But Conveyancing Manager is not stand-alone in the suite of products that SAI Global Property offers. Users can integrate it with Search Manager at their option. A SAI Global Property client using Conveyancing Manager can perform searches on Search Manager thereby generating other individual search fees for the plaintiff in addition to the subscription fees derived through Conveyancing Manager. The relationship between Search Manager and Conveyancing Manager is an example of an “integrated” service, which is a service allowing two products to be sufficiently linked so that they can pass information from one to the other. But a client of SAI Global Property that is committed to Conveyancing Manager can use it to do searches not only in Search Manager but also on competitors’ search platforms in order to assist the practice’s conveyancing work being supported by Conveyancing Manager.

62. The web-based evidence from the plaintiff’s own website shows that it charges the users of Conveyancing Manager a competitive fee, which is publically advertised in the following way:

“Compared with some of the competition – which charges around $180/month/computer which would translate to $1800/month across two offices with ten staff – an annual package of $1,100 for an unlimited number of users is a no-brainer.”

67. The plaintiff also offers a product called Settlement Room, which is a virtual transaction workplace where all parties involved in a forthcoming settlement, including, for example, outgoing and incoming mortgagees and buyer and seller representatives, can gather online to share, compare, and agree on information prior to the moment of actual settlement. This is an online venue for completing the settlement process that is an alternative to other online exchanges such as the Property Exchange Australia (“PEXA”).

68. Settlement Room is a free service. But the plaintiff derives revenue from manually settling and stamping and providing registration services performed out of the plaintiff’s offices. Mr Jones says that he is not aware of the fees that are charged for using those settlement services.

69. Finally, SAI Global Property provides a service called Conveyancing Directory, which is a directory of contact details for property conveyancers and legal practitioners in the property field to assist users of the plaintiff’s other services. This further service is also free of charge but its availability enhances the value of the other products that the plaintiff offers.

70. Mr Jones says his role with the plaintiff did not include hands-on experience selling or providing demonstrations of the Conveyancing Manager product to prospective clients. But this is perhaps too simplistic. It is inevitable that Mr Jones would become quite familiar with the structure and content of the presentations made to clients by his reports. The teams reporting to him did have that direct experience.

71. Conveyancing Manager is installed on a local drive of the computer and is not a cloud-based product accessible on portable devices such as iPads or smart phones.

72. A person with a subscription to Conveyancing Manager, to use the product typically follows steps such as the following: creating a matter for a client of the practice; undertaking searches relating to the property, often using Search Manager; saving the search results for later access; using Conveyancing Manager’s calendar feature to give alerts for approaching deadlines in the conveyancing process; using other prompting features in Conveyancing Manager to progress the conveyance; and calculating the final settlement balance, using the tools in Conveyancing Manager; and then booking in settlement with Settlement Room.

InfoTrack’s Products and Services

73. InfoTrack offers two software products for conveyancing processes, Smokeball and LEAP. These products are viewed as alternatives to Conveyancing Manager and are directly competitive with it.

74. Smokeball’s website describes it as “easy, intuitive, and affordable conveyancing software”. It keeps records of emails, matter documents, information on employees rates, tracks employees billable hours and manages legal accounting among its many functions. It is integrated, in the sense that has been used in this judgment, into InfoTrack’s other systems so that Smokeball will use InfoTrack’s other search products.

75. LEAP is also integrated with InfoTrack’s other products and systems. LEAP offers practice management software for legal and conveyancing practices. LEAP’s website describes its offering as software for “your completely integrated legal practice management software and legal accounting solution”. It is not in contest in these proceedings that InfoTrack’s Smokeball and LEAP products are direct competitors of the plaintiff’s Conveyancing Manager, so further detailed analysis of the evidence in respect of the their features is not necessary in this judgment.

Perfect Portal and Conveyancing Manager

76. But the evidence at the interlocutory hearing foreshadows a major contest about whether Perfect Portal is a competitor with Conveyancing Manager. Stated in its simplest terms, the defendants say that the Perfect Portal product provides front end services to assist conveyancing and legal practices to provide quotations to potential clients, but its substantial functions cease once the client gives instructions for a particular conveyancing matter, from which time other software, namely the competing software of Conveyancing Manager and Smokeball or LEAP could be used. Essentially the argument is that the two forms of software are divided by function: a quotation tool, Perfect Portal, versus a conveyancing management tool for existing clients, Conveyancing Manager. The software is also divided by the time at which each operates: Perfect Portal for prospective clients versus Conveyancing Manger, Smokeball and LEAP for existing clients. The evidence on these differences provided at the hearing was very detailed. It is not possible in this judgment, which does not have to decide the integration question, to set all that evidence out. But the general nature of the dispute can nevertheless be stated.

77. Perfect Portal is a cloud-based product which is designed to assist its users to obtain more conveyancing work by simplifying the issuing of quotes of conveyancers. Once a quote is accepted and the bid for work converted into a matter, Perfect Portal’s product ceases to have an active matter in the role.

78. The contest about integration of products and facilities between InfoTrack and Perfect Portal is best approached through the principal witnesses who gave that evidence. For the defendants, Mr Nathan Cox, an employee of other entities within the InfoTrack group until July 2017 and after that, the National Operations of Perfect Portal, explained integration was low. On the other side, the plaintiff relied upon an affidavit of Mr Benjamin Balk, who said integration was high.

79. The plaintiff’s evidence through Mr Balk is based to a large degree upon a YouTube video from Perfect Portal entitled “How does Perfect Portal integrate with LEAP and InfoTrack?” It was uploaded to YouTube in June 2017. The video is said to provide evidence of the technical integration between the Perfect Portal and InfoTrack platform through the following features of Perfect Portal: its function enabling clients to resubscribe to searches on the InfoTrack platform; a feature requiring searches set out on the quote from Perfect Portal to convert straight to searches on the InfoTrack platform, and the capacity to transfer information from Perfect Portal into the InfoTrack platform as seamlessly as possible.

80. But in reply Mr Cox says that the YouTube video Mr Balk relies upon is out of date and relates to an earlier version of the product. He says that the extent of the integration involved relates to the transfer of very basic information from one product to another.

81. An important factor that will give particular weight to Mr Cox’s evidence at final hearing is that he, as its National Operations Manager, is the person best situated to talk about Perfect Portal’s operations. He emphasises too that Perfect Portal in fact sells products to clients who use practice management systems other than LEAP and that Perfect Portal will continue to sell products irrespective of what other practice management system is used by the client. Moreover, he says that Perfect Portal is actively seeking to integrate its product with products owned by companies other than InfoTrack.

82. The plaintiff was in no position to deny this latter statement is correct. This tends to clear up any misconceptions that might have arisen from the plaintiff’s evidence that if Mr Jones were to start with Perfect Portal, he would probably always be dealing with integration with the plaintiff’s products. His contractual obligations make it clear that he could not work in that area and there is plenty of scope for alternative employment within Perfect Portal until August 2018.

83. The defendants summarise this contest by saying that apart from Perfect Portal’s integration with one of the versions of LEAP software, Perfect Portal is really only able to retrieve pricing information from InfoTrack’s search function for the purposes of populating quotes that are created by Perfect Portal’s product, which is not a very high degree of integration.

Corporate Structure and Administration of Perfect Portal and InfoTrack

84. Mr Cox explains that Perfect Portal is not a subsidiary of InfoTrack, but qualifies as a related company under the Corporations Act. He says Perfect Portal does not share staff, resources, or IT systems or databases with InfoTrack.

85. It is evident that despite this statement that some staff provide common services to both Perfect Portal and InfoTrack, such as Ms Fiona Crawford, who is responsible for both the Jones/InfoTrack and Jones/Perfect Portal contracts. The plaintiff’s evidence shows that there are some common directors and collocated premises between the two.

86. This matter will certainly go to trial with the defendants attempting to refute the plaintiff’s proposition that Perfect Portal is a seamlessly integrated part of InfoTrack for administrative and product purposes. All that can be said at this stage is that a strong case to the contrary is advanced by persons who are in the best position to know how Perfect Portal operates in relation to InfoTrack.

The Contest About the Plaintiff’s Confidential Information

87. In several affidavits the commercial director of the plaintiff, Mr David Katz, deposed to the confidential information of the plaintiff allegedly held by Mr Jones. Mr Katz’s initial affidavit of 5 March 2018 was somewhat vague about the basis of confidentiality of some of this material. These parts of his evidence were rejected and later supplemented.

88. Mr Katz says that Mr Jones had access to a range of confidential information relating to the plaintiff’s customers including the following: Sales.Force.com, an internet based customer database software containing customer details and information relating to the size of deals done with customers; a Central Pricing Module, containing customer price details; general spreadsheets containing financial and other customer information owned by the plaintiff; TransAdmin, a database which tracks every transaction of a customer and processes the information for invoicing processes; and SalesCube, an internal reporting tool for financial transactions showing customer sales data and information from correspondence with customers.

89. It is also said that Mr Jones holds commercially sensitive information about the plaintiff’s product development. This information includes Information Brokerage Reports published on a monthly basis. In addition Mr Jones is said to be involved in the Practice Management Integration initiative, or “PMI Initiative”, the objective of which is to integrate the plaintiff’s Search Manager platform into other software selected by individual customers of the plaintiff. Mr Katz says Mr Jones attended and presented at weekly meetings in relation to this initiative. Mr Jones’ evidence is quite to the contrary. He says that he did give a presentation on the PMI Initiative, but that he had different ideas as to what was required to make the initiative work and that as a result he was not invited to take a role in the initiative in the way he had proposed.

90. Mr Jones says whilst he had access to the databases that Mr Katz lists, he did not have day-to-day management of them, did not input data into the databases, and that they were managed daily by his team. He says he did not retain any copies of any information contained in the databases and says, “I do not recall any of the details of the information contained on the databases”. Given that there is no evidence he has taken any soft or hard copy materials away from the plaintiff’s premises concerning the contents of those databases, his contentions in this respect will be very difficult to dispute at final hearing.

91. Mr Katz suggests that when working with the plaintiff Mr Jones had weekly meetings with senior management and frequent meetings with Ms Kim Jenkins, the Managing Director of Property, Standards and Information Services. Mr Jones says that he only met with Ms Jenkins twice during his employment with the plaintiff.

92. The plaintiff’s evidence also says that Mr Jones has other higher level or strategic information that could be used to its disadvantage. Most of the plaintiff’s revenue comes from 20 or 30 of its 5000 plus customers, and that as part of his role Mr Jones was required to have regular contact with a number of them. It is said that he knows their names, the products they are using, the pricing structure for those customers, and their approximate contract expiry dates.

93. But Mr Jones denies such “in depth knowledge”. He says that he can only recall three of those customers, one of whom is actually publically named in Mr Katz’s affidavit. He also says he is only aware of one specific customer with a fixed-term contract and that he can only recall eight occasions where he had attended a client meeting with any customer, large or small. He says he only has a broad recollection of the revenue information of at most about seven clients.

94. Mr Katz contends that Mr Jones was aware of the plaintiff’s product development. To this, Mr Jones says that product development was not his responsibility and that such knowledge that he had of product development will be irrelevant for Perfect Portal’s product offering. Mr Jones says this is for several reasons. The plaintiff charges customers on a transaction by transaction basis and Perfect Portal runs a subscription based software program.

95. Finally, Mr Jones says he has no independent recollection of any specific pricing or discounting information for the plaintiff’s clients and is not aware of any products that the plaintiff is developing that are not already on the market.

96. Mr Katz put on further evidence to explain in more detail the basis of the claim for confidentiality. But this additional evidence did not change the fundamental nature of the contest.

97. All that can be really said at this interlocutory stage is that there is a most vigorous contest about the confidential nature of, and the amount of, information to which Mr Jones had access. It can also be said that if that contest is to be fully resolved at final hearing Mr Jones may need to be cross-examined for in excess of a day or more.

Mr Jones’ Personal Circumstances

98. Mr Jones’ personal circumstances are relevant to the balance of convenience. He and his wife live in the upper North Shore of Sydney, where they rent a home for $3,600 per month. Mr Jones and his wife have two children aged 6 and 9 who are dependent upon them. Mr Jones’ wife works in the retail industry and earns approximately $55,000 per year gross plus superannuation.

99. But the family has major outgoings. On top of their monthly rental commitments of $3,600, they have to meet car loan repayments of $890 per month. Mr Jones estimates their general living expenses, including for utilities and the raising of their two children, at $2000 per month. Mrs Jones’ income is not sufficient to cover these family commitments.

100. Mr Jones deposes that if he is restrained from commencing employment with Perfect Portal and not paid any salary in the meantime, he will not be able to meet his financial commitments and his family will need to access savings or credit facilities to meet day to day expenses. Of course, another alternative between now and final hearing, which could expected to be about six weeks to two months away once the matter is put into the expedition list, will be for him to attempt to take other employment.

101. But Mr Jones says he has already applied for some 40 jobs after leaving SAI Global Property and, apart from Perfect Portal, has not yet received an offer of alternative employment. The plaintiff examined the financial and personal records Mr Jones produced in answer to a Notice to Produce. These show, and the plaintiff submits with some justification, that Mr Jones may have only applied for 18 jobs, not the 40 he claims. But even if the true number is closer to 18, it can be accepted that Mr Jones has undertaken an active search for alternative employment, which has not been successful apart from his engagement by Perfect Portal.

Legal Principles – Interlocutory Injunctions

102. In deciding whether or not to grant an interlocutory injunction, the Court must consider whether there is a serious question to be tried and then whether the balance of convenience, questions of hardship and related factors warrant the grant of an interlocutory injunction. First, the plaintiff must prove a serious, not a speculative, case which has a real possibility of ultimate success and that property or other interests might be jeopardised if no interlocutory relief is granted: JD Heydon, MJ Leeming and PG Turner, Meagher, Gummow & Lehane’s Equity: Doctrines & Remedies (5th ed 2014, LexisNexis Butterworths) at [21–350] (“Equity Doctrines and Remedies”), discussing the requirements of the Beecham Group Ltd v Bristol Laboratories Pty Ltd (1968) 118 CLR 618 prima facie case test. Put another way, the plaintiff must show a sufficient likelihood of success to justify the preservation of the status quo pending the trial: Australian Broadcasting Corporation v O’Neill (2006) 227 CLR 57; [2006] HCA 46 at [70] – [71].

102. Then, it becomes a matter of analysing if, in all the circumstances of the case, considering the balance of convenience and issues of hardship, the Court should nonetheless exercise its discretion by declining to issue an interlocutory injunction: Equity Doctrines and Remedies at [21–350]; and see also Australian Broadcasting Corporation v Lenah Game Meats Pty Ltd (2001) 208 CLR 199; [2001] HCA 63 and Beese v Woodhouse [1970] 1 All ER 769; [1970] 1 WLR 586. Other factors to which the Court will have regard include: the adequacy of damages; the possibilities of alternative remedies; whether there has been any laches or delay; the strength of the grounds of defence suggested by the defendant; and what, if any, undertakings the defendant is prepared to give. But hardship and the balance of convenience are very important: Equity Doctrines and Remedies [21 – 375]. If any infringement of a plaintiff’s right between writ and hearing would be properly compensated in damages, that fact alone can, but not must, be a ground for declining an injunction: McCarty v Council of the Municipality of North Sydney (1918) 18 SR (NSW) 210.

103. Here, given the practicalities of preparing for and holding a final hearing in this case probably in some six weeks to two months’ time, the interlocutory restraint that the plaintiff seeks to have continued will, if granted, have the practical effect of giving something close to final relief against Mr Jones in the form of a restraint for several months of a possible six months, which seems to be the maximum practical restraint for which the plaintiff now contends. On the other hand if the restraint sought is refused, that refusal will have the practical effect of giving something close to final relief in favour of Mr Jones.

104. This interlocutory dilemma raises special considerations. In Kolback Securities Ltd v Epoch Mining NL (1987) 8 NSWLR 533 (“Kolback”) McLelland J (as His Honour then was) when considering what must be established to obtain an interlocutory injunction, including when the restraint in question may have implications for the disposition of the proceedings at final hearing, said:

"As I see it, the position is as follows. Where a plaintiff's entitlement to ultimate relief is uncertain, the Court, in deciding to grant or refuse an interlocutory injunction, must consider what course is best calculated to achieve justice between the parties in the circumstances of the particular case, pending the resolution of the uncertainty, bearing in mind the consequences to the defendant of the grant of an injunction in support of relief to which the plaintiff may ultimately be held not to be entitled, and the consequences to the plaintiff of the refusal of an injunction in support of relief to which the plaintiff may ultimately be held to be entitled: see, eg, Appleton Papers Inc v Tomasetti Paper Pty Ltd [1983] 3 NSWLR 208 at 216; A v Hayden (No 1) (1984) 59 ALJR 1 at 4-5; 56 ALR 73 at 79. Where the uncertainty depends in whole or in part on a contested question of fact it is not appropriate for the Court to decide that question on the interlocutory application. Where the uncertainty depends in whole or in part on a contested question of law, it may or may not be appropriate for the Court to decide that question on the interlocutory application, depending on circumstances, eg, whether the question is novel or difficult, or is susceptible of resolution on the present state of the evidence, or whether the urgency of the matter renders it impracticable to give proper consideration to the question: see, eg, A v Hayden (No 1) (at 4; 78); Cohen v Peko-Wallsend (1986) 61 ALJR 57 at 59;68 ALR 394 at 397. If the Court does decide the question of law the uncertainty is to that extent removed.

Unless the plaintiff shows that there is at least a serious question to be tried which if resolved in its favour would entitle it to final relief, then the requirements of justice as between the parties will dictate that an interlocutory injunction should be refused: Australian Coarse Grain Pool Pty Ltd v Barley Marketing Board of Queensland (1982) 57 ALJR 425; 46 ALR 398; Tableland Peanuts Pty Ltd v Peanut Marketing Board (1984) 58 ALJR 283; 52 ALR 651; A v Hayden (No 1); Castlemaine-Tooheys Ltd v South Australia (1986) 60 ALJR 679; 67 ALR 553 and Cohen v Peko-Wallsend Ltd.

Apart from this, although normally the Court "does not undertake a preliminary trial, and give or withhold interlocutory relief upon a forecast as to the ultimate result of the case" (Beecham Group Ltd v Bristol Laboratories Pty Ltd (1968) 118 CLR 618 at 622), there are some kinds of case in which for the purpose of seeing where lies the balance of convenience (or more specifically "the balance of the risk of doing an injustice" - see per May LJ in Cayne v Global Natural Resources plc [1984] 1 All ER 225 at 237, cf per Brennan J in Brayson Motors Pty Ltd v Federal Commissioner of Taxation (1983) 57 ALJR 288 at 292; 46 ALR 279 at 285), it is desirable for the Court to evaluate the strength of the plaintiff's case for final relief: see, eg, Brayson Motors Pty Ltd v Federal Commissioner of Taxation (at 292; 285); Castlemaine-Tooheys Ltd v South Australia at 682; 559. One class of case to which this applies is where the decision to grant or refuse an interlocutory injunction will in a practical sense determine the substance of the matter in issue: see, eg, NWL Ltd v Woods [1979] 1 WLR 1294 at 1306-1307; [1979] 3 All ER 614 at 625-626 per Lord Diplock; Cayne v Global Natural Resources plc. The present is such a case. The substantial matter in issue is whether Epoch should be permitted to proceed with the issue of non-renounceable rights in accordance with the announcement of 13 March 1987. That will be irrevocably determined in a practical sense by the grant or refusal of an interlocutory injunction."

106. These principles give guidance as to what course should be followed at this interlocutory hearing. But in order to apply these principles it is also necessary briefly to examine what principles will relevantly govern the Court’s determination at final hearing.

Legal Principles – The Enforcement of Employment Agreement Restraints

107. The relevant law may be shortly stated. The validity of the 6-month post-employment restraints being sought based on the employment agreement will be in issue at final hearing. A contractual restraint such as clause 27.1(a) will be operative subject to the operation of the common law and the Restraints of Trade Act 1976, s 4. In this State general law doctrines of the avoidance of restraints of trade on grounds of public policy are modified by the Restraints of Trade Act, s 4, which relevantly provides as follows:

“4 EXTENT TO WHICH RESTRAINT OF TRADE VALID

(1)   A restraint of trade is valid to the extent to which it is not against public policy, whether it is in severable terms or not.

(2)   Subsection (1) does not affect the invalidity of a restraint of trade by reason of any matter other than public policy.

(3)   Where, on application by a person subject to the restraint, it appears to the Supreme Court that a restraint of trade is, as regards its application to the applicant, against public policy to any extent by reason of, or partly by reason of, a manifest failure by a person who created or joined in creating the restraint to attempt to make the restraint a reasonable restraint, the Court, having regard to the circumstances in which the restraint was created, may, on such terms as the Court thinks fit, order that the restraint be, as regards its application to the applicant, altogether invalid or valid to such extent only (not exceeding the extent to which the restraint is not against public policy) as the Court thinks fit and any such order shall, notwithstanding sub-section (1), have effect on and from such date (not being a date earlier than the date on which the order was made) as is specified in the order.

(4)   Where, under the rules of an association, a person who is a member of the association is subject to a restraint of trade, the association shall, for the purposes of subsection (3), be deemed to have created or joined in creating the restraint.

(5)   An order under subsection (3) does not affect any right (including any right to damages) accrued before the date the order takes effect.”

108. Neither party disputed that the employment agreement between SAI Global Property and Mr Jones is governed by the law of this State.

109. I am indebted to McDougall J’s useful summary of these principles, arising both under general law and under the Restraints of Trade Act as set out by his Honour in Stacks/Taree Pty Ltd v Marshall (No 2) [2010] NSWSC 77 at [44]. There his Honour stated as follows:

“(a)   At common law, a restraint of trade is contrary to public policy and void, unless it can be shown that the restraint is, in the circumstances of the particular case, reasonable: Nordenfelt v Maxim Nordenfelt Guns and Ammunition Co Ltd [1894] 1 AC 535 at 565; Amoco Australia Pty Ltd v Rocca Bros Motor Engineering Co Pty Ltd (1973) 133 CLR 288 at 315.

(b)   In New South Wales, it is not strictly correct that a restraint is prima facie void; a restraint is valid to the extent to which it is not against public policy, even if not in severable terms: Restraints of Trade Act (NSW), section 4(1): see Koops Martin v Reeves [2006] NSWSC 449 at [27] per Brereton J.

(c)   The onus at common law of showing that the restraint goes no further than is reasonably necessary to protect the interests of the person in whose favour the restraint operates, lies on the party seeking to support the restraint as reasonable: Adamson v New South Wales Rugby League Limited (1981) 27 FCR 535 at 554 per Hill J and North Western Salt Co Ltdv Electrolytic Alkali Co Ltd [1914] AC 461 at 470 per Viscount Haldane LC.

(d)   The onus of establishing that a contract in restraint of trade is injurious to the public interest lies on the party alleging that this is so: see for example Attorney General of Australia v Adelaide Steamship Co Ltd [1913] AC 781 at 797.

(e)   The Court gives considerable weight to what parties have negotiated and embodied in their contracts, but a contractual consensus cannot be regarded as conclusive, even where there is a contractual admission as to reasonableness: see Woolworths Ltd v Olson [2004] NSWCA 372 at [39].

(f)   The validity of the restraint is to be tested at the time of entering into the contract and by reference to what the restraint entitled or required the parties to do rather than what they intend to do or have actually done: see Woolworths Ltd v Olson[2004] NSWCA 372 at [40].

(g)   The test of reasonableness is measured by reference to the interests of the parties concerned and the interests of the public: Nordenfelt v Maxim Nordenfelt Guns and Ammunition Co Ltd [1894] AC 535. The requirement that the restraint be reasonable in the interests of the parties means that the restraint must afford no more than adequate protection to the party in whose favour it is imposed: Herbert Morris Ltd v Saxelby [1916] 1 AC 688 at 707 ; Buckley v Tutty (1971) 125 CLR 353 at 376; Linwar Securities Pty Ltd v Christopher Savage [2006] NSWSC 786 at [25] and [26] per Nicholas J; and Koops v Martin v Reeves[2006] NSWSC 449 at [28] per Brereton J.

(h)   An employer is not entitled to require protection against mere competition: Dewesv Fitch (1920) 2 Ch 159 at 181; Wright v Gasweld Pty Ltd (1991) 22 NSWLR 317 at 329 per Gleeson CJ. Covenants that restrain competition are invalid unless they are reasonably necessary to protect legitimate business interests: see for example Harlow Property Consultants Pty Ltd v Byford [2005] NSWSC 658 at [24] and [25] per White J.

(i)   An employer is entitled to protection against the use by the employee of knowledge obtained by him of his employer's affairs in the ordinary course of trade: Dewes v Fitch (1920) 2 Ch 159 at 181. A restraint clause will be invalid unless it is necessary to prevent disclosure of trade secrets or use of a connexion built up by the employee with customers: JD Heydon, The Restraint of Trade Doctrine (Butterworths, 2 nd edition, 1999) at 66; Aussie Home Loans v X Inc Services [2005] NSWSC 285 at [14] per White J.

(j)   The relevant knowledge must be more than simply the skill and knowledge necessary to equip the employee as a possible competitor in the trade, but the obtaining of personal knowledge of and influence over the customers of his employer, or such an acquaintance with his employer's trade secrets as would enable him to take advantage of his employer's trade connection or utilise information confidentially obtained: Dewes v Fitch (1920) 2 Ch 159 at 181.

(k)   An employer’s customer connection is an interest which can support a reasonable restraint of trade, but only if the employee has become, vis-a-vis the client, the human face of the business, namely the person who represents the business to the customer: see for example Cactus Imaging Pty Ltd v Peters (2006) 71 NSWLR 9 at [25] per Brereton J; and Kearney v Crepaldi & Ors[2006] NSWSC 23 at [51] to [53] per McDougall J.

(l)   The effect of the Restraints of Trade Act 1976 (NSW) is to allow the restraint to be read down so as to be valid to the extent necessary only to capture the conduct of the defendant, if that extent would have been valid. However, the Act does not allow the Court to remake the contract or a covenant in the contract: Orton v Melman (1981) 1 NSWLR 583; Wright v Gasweld Pty Ltd (1991) 22 NSWLR 317 at 329 ; Kone Elevators Pty Ltd v McNay (1997) ATPR 41-564 (NSW Court of Appeal) at 43,833. Whilst the Court is permitted to read down the clause if the clause is so capable, it cannot be re-drafted: Kone Elevators Pty Ltd v McNay (1997) ATPR 41-564 (NSW Court of Appeal) at 43,833; Woolworths v Olson [2004] NSWCA 372.”

110. The defendants submitted that the plaintiff’s Clause 27.1(a) restraint was unreasonable and would be struck out at trial. The plaintiff claimed that the restraints would survive scrutiny at trial.

111. The courts have recognised that an employer has a legitimate interest in maintaining a stable and trained work force but an employer has no legitimate interest in preventing a former employee from taking employment with a competitor: Kearney v Crepaldi & Ors [2006] NSWSC 23 at [55] – [58] and Buckley v Tutty (1971) 125 CLR 353; [1971] HCA 71.

112. But the second defendant submits that generally a restraint would not be enforceable if it were to seek to prevent a former employee dealing with customers with whom the employee had no personal contact on the ground that there has been no capacity for personal influence: John Fairfax Publications Pty Ltd v Birt [2006] NSWSC 995. Mr Jones submits that he was not the human face of the plaintiff’s business and that as a result, the restraints sought by the plaintiff are mere restraints on competition and a former employer is not entitled to require protection against mere competition: Stacks/Taree Pty Ltd v Marshall (No 2) [2010] NSWSC 77.

113. Other relevant principles are discussed in the course of the Court’s consideration of whether there is a serious question to be tried and the balance of convenience.

Consideration – Serious Question to Be Tried

114. On the issue of whether there is a serious question to be tried, the issues will arise in the following order at final hearing:

1. whether Perfect Portal is “a business that competes with” SAI Global Property, such that Mr Jones may be in breach of clause 27.1(a) by engaging as a Perfect Portal employee;

2. whether the clause 27.1(a) restraint is enforceable, as it goes no further than is necessary to protect SAI Global Property’s legitimate business interests; and

3. if the clause 27.1(a) restraint goes further than is necessary to protect SAI Global Property’s legitimate business interests, what level of restraint is maintainable after the operation of the Restraints of Trade Act.

115. Nothing which is said here should be taken as a definitive prediction of what will happen at final hearing. It is merely the weighing arguments as best one can at a fairly high level at an interlocutory hearing. Also, nothing that is said here is a reflection on the legal representatives of either side, who each presented their respective cases with commendable thoroughness and efficiency. Although the plaintiff’s case has been the less successful, in my view, both counsel and solicitors, put the plaintiff’s case at an interlocutory level to its very best advantage offering facts and arguments in considerable and diligent detail. But despite that, reflecting on all the circumstances, including the problems that the plaintiff’s case faces, the Court has reached the view that the existing injunction should be dissolved.

116. (a) The Breach Issue. It is not in dispute that clause 27.1(a) forms part of Mr Jones’ employment agreement and he has offered to give undertakings for a period of six months that would encompass all the obligations provided for in clause 27.1(b), (c) and (d). So the first contest at the final hearing will be whether Mr Jones is in breach of clause 27.1(a).

117. The primary question is whether Perfect Portal operates a business that competes with SAI Global Property, so as to attract the operation of clause 27.1. There will be a very substantial debate at final hearing about whether or not Perfect Portal is a competitor of SAI Global Property.

118. The defendants have quite a strong case that Perfect Portal is not a “business that competes with [SAI Global Property]”, within clause 27.1(a) of the employment agreement. SAI Global Property seeks to show how seamlessly persons using Perfect Portal would be able to move into products offered by InfoTrack in direct competition with SAI Global Property. But currency of evidence is important here. The defendants propound a compellingly arguable case that the work that Mr Jones would be doing with Perfect Portal is not competitive with products presently offered to the public by SAI Global Property. It will be a demanding contest for the plaintiff at final hearing to establish that Perfect Portal is a business that competes with it.

119. There is a contest about the meaning of the word “competes” in clause 27.1(a), based on Black J’s decision in Veda Advantage (Australia) Pty Ltd v de Beer [2016] NSWSC 37 (“Veda”). The defendants submit that a “competitor” means an entity providing the same or similar services as trade rivals. The plaintiff says that Black J’s wider view in Veda is the way to interpret clause 27.1(a) such that a competitor may be as broad as including entities that sell separate products, operate or are about to operate businesses in competition, or might pose a real commercial threat to one another and also where there is some substitution between products.

120. This is another issue for final hearing. There is some obvious commercial logic in Perfect Portal integrating further with InfoTrack products to the advantage of both. But it can also be said with considerable force that Perfect Portal has a strong commercial incentive to provide its services to competitors of InfoTrack. The resolution of this debate about the meaning of competitor at final hearing in favour of the plaintiff is not obviously probable and will depend upon a close examination of contested facts.

121. (b) The Reasonableness Issue. The questions for final hearing will be whether at common law the clause 27.1(a) restraint will ultimately be enforced against Mr Jones, or whether they go beyond the protection of the plaintiff’s legitimate business interests. On this issue the plaintiff has an arguable case. But in my view it is no more than an arguable one. These proceedings raise considerations to which McLelland J’s observations in Kolback are relevant. To use McLelland J’s words in Kolback, “there is a serious to be tried, but that is as far as it goes”. There are a series of considerations on the reasonableness issue that will weigh against the plaintiff’s case at final hearing. They can be mentioned seriatim now.

115. The plaintiff’s confidential information case is not strong. One of the first arguments the plaintiff needed to deploy, and did deploy, to show that clause 27.1(a) restraints were not designed to protect its legitimate business interests rather than being a mere restraint against competition was to seek to rely upon Mr Jones’ alleged access to confidential information. But the case presented about confidential information is potentially defeatable in a number of alternative ways. There is no suggestion Mr Jones has taken away any confidential information, any databases, any client lists or other electronic or paper-based information from SAI Global Property.

116. Mr Jones’ capacity to use confidential information is objectively limited. No realistic case made that he has used any artificial means to enhance his memory, so that he could absorb customer names or lists or other confidential information. SAI Global Property’s potential customers run into the many thousands, although there are fewer larger ones. The plaintiff’s case will run up against the ordinary fallibility and limits of human memory. Mr Jones left SAI Global Property’s employ just over two months ago over which time his memory would be expected to deteriorate in any event.

117. The scope of the confidential information is in issue. Much of the price information that the plaintiff claims is able to be readily deconstructed externally by a competitor from SAI Global Property’s own public advertising of its services from which can be subtracted the known fees that government authorities charge for access to their public databases.

118. Any case that Mr Jones was in some sense the face of the plaintiff’s business is not a strong one. It is true that Mr Jones in his sales role did attend meetings with clients, but he will present a strong case that a substantial part of the day-to-day contact between SAI Global Property and its clients was effected through the employees who were answerable to him, employees who appear mostly to still be with the plaintiff’s business. At the two levels below the Mr Jones quite a number of those employees dealt with larger, medium size, and smaller businesses.

119. But in any event, a concern that Mr Jones’ prior customer contact might be used to the plaintiff’s disadvantage with a competitor has been effectively answered by the undertakings that have been offered and subject to any adjustment can be now accepted, or made the subject of orders. And in my view, those undertakings (or orders in their place) can be made more effective until final hearing by a requirement for the defendants to retain information and provide other information to the plaintiff as will be detailed below.

120. Other matters should be briefly mentioned. The Court can take into account the presence of a non-solicitation clause in assessing the reasonableness of a covenant not to compete. Non-solicitation obligations on Mr Jones, in my view, are robust and that is a relevant factor both at final hearing and on this interlocutory hearing.

121. Submissions were put on both sides about the restraints imposed by Perfect Portal and their relevance to the reasonableness of the primary restraints in issue. But the Court has not found that the arguments on either side of that debate useful.

122. (c) The Extent the Restraint Is Enforceable. Even if the restraints go beyond the protection of SAI Global Property’s legitimate business interests, the plaintiff can still deploy an argument that the restraints can be enforced to the extent that the Restraints of Trade Act permits them to be enforced in the public interest.

123. But even here at final hearing the plaintiff encounters another problem. The need for the protection of the plaintiff’s goodwill and customer connection that might justify a restraint against Mr Jones joining a competitor is an argument of ever diminishing power. Its fulcrum is Mr Jones’ memory of the detail of the plaintiff’s products, internal data and customers. But Mr Jones has taken no soft or hard copy of anything away from his employment with the plaintiff which would aid him in maintaining those connections. Nor is it suggested he has breached the undertakings he has already given. Two months have gone by since he left. It may be very difficult to justify a restraint close to six months, such that by the time the final hearing comes on, any justifiable restraint period would have already reached its practical limit.

124. Finally, the various acts of dereliction of duty alleged against Mr Jones do not appear much to bear upon the issues to be determined at final hearing. Given the relatively minor amounts involved and that Mr Jones did not have, in the case of many of them, a proper opportunity to explain and account for the quantum and nature of the expenditure in question before the ending his employment, they are unlikely at final hearing to amount to repudiatory conduct on his part. Even if they did, some of them were known to the plaintiff before it signed its deed of release on 6 February and they would presumably be covered by it.

125. Moreover, such conduct does not absolve the plaintiff from having to establish the contention upon which it bears the onus; that the restraint in question goes no further than is reasonably necessary to protect the plaintiff’s interests, although the onus of establishing that the term is injurious to the public interest lies on the party so alleging.

Consideration – The Balance of Convenience and Discretionary Factors

133. The Balance of Convenience. The balance of convenience, or as it is often better put, “the balance of justice”, in the circumstances favours not granting interlocutory relief beyond the existing orders and undertakings offered. Mr Jones would suffer considerable hardship if an injunction were granted.

134. It is quite impracticable for Mr Jones to take another job of uncertain duration whilst he is awaiting a final hearing. It is not clear that such jobs are readily available to him. And at his managerial level the kind of uncertainty that he would present to a future employer, already committed to Perfect Portal as he is, makes him an even less attractive prospect than he was when he applied for employment before he went to Perfect Portal. In my view, it is not realistic to consider the possibility of alternative employment pending final hearing. The plaintiff’s hardship case on the balance of convenience needs to be assessed on the basis that he either: (1) works for Perfect Portal pending final hearing; or (2) he is paid a salary as a condition of remaining in effect on garden leave pending final hearing; or (3) he suffers what in the Court’s assessment would be unreasonable hardship.

135. Whilst that hardship could to a degree be alleviated by including a term requiring the plaintiff to pay the equivalent of Mr Jones’ proposed salary with Perfect Portal during the term of the undertaking it is difficult to justify that course on the basis of the plaintiff’s case, which just qualifies as arguable, and where Mr Jones and the family that depends upon him has a strong interest in a stable and reasonably predictable financial future. Added to that is the security that can be afforded to the plaintiff with machinery orders (elaborated below) which will give greater force the protection of the plaintiff’s interest until final hearing together with the full undertakings that have been offered in respect of the obligations under clause 27.1(b), (c) and (d) of the employment agreement.

136. Other discretionary factors – delay. The defendants argue that the plaintiff has known since 23 (or possibly 16) February 2018 that Mr Jones would be commencing employment with either InfoTrack or Perfect Portal. But in my view, the exchange of correspondence between the parties since that date does not show delay on the plaintiff’s part which should be held against it in the exercise of the Court’s discretion to extend the grant of interlocutory relief.

137. Mr Jones informed the plaintiff he intended to commence employment with InfoTrack on 23 February 2018 and offered the non-solicitation and non-dealing undertakings. After correspondence from the plaintiff on 28 February, Mr Jones wrote again on Friday, 2 March indicating that he intended to commence employment with Perfect Portal on 6 March and providing the extended non-solicitation and non-dealing undertakings. The plaintiff commenced proceedings on Monday, 5 March.

138. In my view, the plaintiff acted with appropriate dispatch in the circumstances. It commenced proceedings the next working day after notification by Mr Jones and before he commenced work with Perfect Portal. Moreover the letters that the plaintiff sent on 16 and 28 February 2018 put Mr Jones on notice that a contest about his employment with InfoTrack was highly likely. Any argument that Mr Jones acted to his detriment because of inaction on the plaintiff’s part is without foundation.

139. The Sham Argument. The plaintiff’s case is that the employment contract with Perfect Portal is some kind of sham to cover the fact that Mr Jones is really going to work directly for InfoTrack. But in my view the evidence supporting that approach is not strong for several reasons. First, despite the Court permitting the plaintiff to call on probing Notices to Produce to the defendants, nothing was produced which shows that the Jones/Perfect Portal agreement was anything other than genuine. Secondly, the produced email traffic with Ms Hirons is not inconsistent with this conclusion. Thirdly, there is a real and well-defined functional separation between Perfect Portal and other InfoTrack products that has clear boundaries. The only real argument is whether those boundaries can be crossed. To a degree they can be. But the evidence nevertheless provides a structure which would prevent Mr Jones breaching his post-employment covenants to the plaintiff, something that can be well-protected against in a practical sense.

140. Conclusion. For these reasons the Court declines to grant the interlocutory injunction sought and will dismiss the claims for interlocutory relief sought in orders 1 and 2 of the Summons.

141. These reasons have initially focused on the position of the first defendant, Mr Jones. Order 2 of the Summons seeks orders that Perfect Portal and InfoTrack be restrained from inducing the plaintiff to breach order 1 of the formal prayers for interlocutory relief. As the Court will decline for the reasons given to grant interlocutory relief against Mr Jones it follows that what is, in substance, a derivative claim for relief against Perfect Portal and InfoTrack should also be dismissed.

The Defendants’ Undertakings and Other Procedural Orders

142. The result of the interlocutory application is that the plaintiff’s application for interlocutory relief is dismissed.

143. A Temporary Extension. It is possible that the plaintiff may wish to appeal against the dismissal of its claim for interlocutory relief over and above the undertakings given. This status quo should be preserved just a little longer at least to preserve that right. For that reason, the Court will order that existing orders made in these proceedings until the date of giving of this judgment will continue until 4pm, Monday 16 April 2018. But if no appeal is brought from that time on, the first defendant will be free to take up his employment with Perfect Portal and the parties should otherwise proceed to prepare the matter for final hearing through the Expedition List.

144. Other Adjustments to the Orders. There may be requirements to adjust the orders made below. It is desirable that that be managed closely by the Court, whilst the matter is moving into the Expedition List. For that reason, these orders provide for liberty to apply from when the matter will be managed by the expedition judge. But for approximately the next week the parties may apply back to me.

145. At the hearing on 9 March 2018, Mr Moses SC, senior counsel for the defendants, indicated a preparedness of the first defendant to give undertakings to the Court in terms of those set out in the Jones/Perfect Portal employment agreement that currently appear as contractual obligations under the heading “Your previous employment at SAI Global Property Pty Limited”. The orders made below do not specifically provide for those undertakings. They are already the subject of contractual agreement between Perfect Portal and Mr Jones. The existence of this litigation and the undertakings that have been given makes it in both Perfect Portal’s and Mr Jones’ financial interests that they each comply with these contractual obligations.

146. But SAI Global Property may require more formality. If it wishes to opt for those contractual terms to be made undertakings by one or more of the defendants, or drafted into the form of orders against one or more of the defendants, then the Court would be inclined to receive those undertakings or make those orders. It seems to the Court that the parties are the best persons to craft those additional undertakings or orders in the first instance, and the Court will give them an opportunity to do so. If this matter cannot be resolved between the parties the Court will deal with it at 9.30am on Tuesday, 17 April when the matter is re-listed.

147. The costs of an interlocutory application such as the present would ordinarily be decided at final hearing. But there may be some incidental costs issues that may need to be dealt with as well and the parties are invited to take up the liberty to apply for that purpose as well.

148. Payment of Mr Jones’ Salary. The parties were at issue during and after the hearing in written submissions about whether it should be a condition of the grant of the interlocutory relief that the plaintiff be required to pay Mr Jones’ salary. The Court indicated to the parties that it would be open to the Court to make it a condition of the grant of interlocutory relief that Mr Jones’ salary be paid by the plaintiff and be repaid in the event that the plaintiff were ultimately successful in the proceedings, and that the Court would only grant interlocutory relief on the basis that salary was paid.

149. A dispute then ensued between the parties as to whether relief can be offered conditionally in that way by the Court, such that if the plaintiff is not prepared to meet the conditions of the continuation of the grant of relief, then the relief will not be continued for lack of the plaintiff’s compliance with its terms. The Court had in mind that if the Court had granted interlocutory relief subject to a condition, there would still have to be a supplementary hearing as to whether the plaintiff accepted such a condition. The plaintiff’s submissions put that this is an available course. And in my view that is the correct position.

150. In the result though, for the reasons already given, this issue does not arise. But the Court can indicate for the benefit of the parties that had the Court not reached the conclusion that it has, and were interlocutory relief to be granted, the Court would only have been prepared to grant it on the basis that Perfect Portal or SAI Global Property should be required, in the circumstances of this case, to pay Mr Jones’ salary until final hearing. SAI Global Property has pointed out that there is no point of principle that such payments must be made by a plaintiff seeking interlocutory relief, and the question of whether payment has been made, and if so by whom, is quite fact-specific: see Woolworths Limited v Mark Konrad Olson (2004) NSWCA 372, Metcash Ltd v Joao Lewis Jardin[No 3] [2010] NSWSC 1096, and DP World Sydney Limited v Guy [2016] NSWSC 1072.

151. The Court has emphasised the importance of financial hardship and stability for Mr Jones’ family in this case. Such considerations would support the continuation of the injunction on the condition that the plaintiff pay Mr Jones’ salary until final hearing. On SAI Global Property’s maximum case that would be until 6 August 2018, unless a shorter period were determined at the final hearing.

152. The plaintiff first suggests that InfoTrack, or Perfect Portal, should pay Mr Jones up until the expiry of the injunction and that only upon determination of final hearing that the non-compete restraint is totally unenforceable would SAI Global Property then have to reimburse InfoTrack or Perfect Portal.

153. But the Court would have preferred the alternative position also offered by SAI Global Property: that it pays Mr Jones’ salary directly. SAI Global Property argues that the apparent keenness of the second and third defendants to employ the first defendant and his keenness to be so employed justify the form of course it suggests. But these are not in my view very weighty considerations.

154. Keeping Digital Information. The matter has been determined at this interlocutory hearing upon the giving of the undertakings that the Court has accepted and no additional interlocutory relief will be granted. But the plaintiff has a continuing concern that any breach of undertaking by Mr Jones and the other defendants may go undetected. The Court should, in these circumstances, ensure so far as is reasonable, that the plaintiff is in the best position to monitor whether or not the undertakings have been honoured. The defendants’ adherence to the undertakings will be relevant to many issues at final hearing. Smooth proof of compliance or non-compliance with the undertakings given can be secured now.

155. In the modern digital age the Court can make more secure the enforcement of undertakings that might otherwise be able to be broken without the other side being aware of the breach. In this case, involving as it does organisations experienced in the IT industry, the formulating and implementation of appropriate protection and preservation orders of this kind should not be difficult.

156. The Court will require the defendants to retain until judgment on any final hearing stored in an accessible electronic form all electronic business records generated by Mr Jones in the course of his employment by Perfect Portal. The Court will also require that the defendants provide to the legal representatives of the plaintiff and on their undertaking that the information will not be used in any way without the leave of the Court, on a confidential basis by 5:00pm on Tuesday, 17 April 2018 all business and personal email addresses, mobile and land line telephone numbers used by Mr Jones between the date of these orders and any final hearing. The judge at final hearing can then make such orders for access to those records as is required for determination of the issues at final hearing or the assessment of damages at any subsequent damages hearing.

Conclusions and Orders

157. For these reasons the Court will order as follows. The parties may seek to adjust the precise form of these orders. The grant of liberty to apply will encompass the possibility that some adjustment may need to be made.

1. Upon the plaintiff by its counsel giving the usual undertaking as to damages, the Court will further extend order 5 of the orders made by Justice Kunc on 5 March 2018 until 5pm on Monday, 16 April 2018 but such extension beyond the making of these orders at 4:00pm today is only granted so the plaintiff has a reasonable opportunity to consider whether it wishes to apply to the Court of Appeal for leave to appeal against this interlocutory judgment.

2. Note the first defendant’s undertakings to the Court by his Counsel that he will:

1. not divulge, share or use any Confidential Information (as defined in his employment contract with the plaintiff dated 4 May 2016) about the plaintiff or its affairs without the prior written consent of the CEO of the plaintiff;

2. not create, make copies of or permit use of any written material, documents, records, papers, disks relating to the business or activities of the plaintiff;

3. for the period (ending at 5:00pm on 6 August 2018 being six (6) months from the date of the termination of his employment with the plaintiff on 6 February 2018):

1. not solicit the business of, accept the business of, or deal with, any of the plaintiff’s clients with whom he dealt during the last 12 months of his employment with the plaintiff;

2. not interfere with the relationship between the plaintiff and its employees or suppliers; and

3. not solicit the business of, accept the business of, or deal with, any prospective client of the plaintiff with whom he dealt during the last 12 months of his employment with the plaintiff.

3. Otherwise dismiss the plaintiff’s claim for interlocutory relief made in prayers 1 and 2 of the summons.

4. So to as facilitate the monitoring and verification at any final hearing of the defendants’ compliance with the undertakings given in (2) above, order that each of the defendants is required until any final hearing in these proceedings to:

1. retain in a reasonably accessible form electronic copies of all documents:

1. generated by the first defendant;

2. received by the first defendant; or

3. created by the first defendant

in the course of his employment by Perfect Portal, including internal and external email and other correspondence, sales data, credit card statements, expense and travel documents; and

2. provide to the lawyers for the plaintiff (upon their undertaking to keep such information confidential and not to use such information other than with the prior leave of the Court), email addresses, mobile phone numbers, land lines, and social media account numbers used by the first defendant during that period for business or other purposes.

5. Refer the proceedings into the Expedition List for directions on Friday, 13 April 2018.

6. List the proceedings for further mention at 9.30am on Tuesday, 17 April 2018 to deal with any incidental issues, including costs issues, arising out of these orders.

7. Grant liberty to apply.

**********

Amendments

01 May 2018 - 1. Under representation and in [4] line 3, change “Ms L Bulut” to “Ms V Bulut.

2. [3] line 6, change semi-colon after “weak” to full stop.

3. [9] line 2, italicise “1970”.

4. [14] line 6, capitalise “short term incentive”.

5. [20] line 2, insert “on” before “6”.

6. [21] line 1, after “Mr de Polignac” insert “Head of Sales Australia for SAI Global Property, a senior member of staff to whom Mr Jones reported,” .

7. [27] line 1, capitalise “notices” and “produce”.

8. [33] line 12, remove “And” before “PP”.

9. [43] line 7, change “month” to “months”.

10. [48] line 1 and 2, insert “As already explained in these reasons,” before “Mr Jones reported”; line 2, change “Thibault” to “Mr”.

11. [76] line 9, insert colon after “function”, delete parentheses before “a quotation tool”.

12. [76] line 10, insert comma after “Portal” and after “clients”, remove italics and capitalisation of “Conveyancing Manager”.

13. [76] line 11, delete parentheses around “Conveyancing Manager”, insert full stop after “Conveyancing Manager”, delete “and also divided”, insert “The software is also divided by the” before “time”, insert “at which each operates:” after “time”, delete “(for prospective clients,”.

14. [76] line 12, insert space between “PerfectPortal”, insert “for prospective clients versus” after “Perfect Portal”, delete “to execute work for actual clients,”.

15. [76] line 13, insert “for existing clients” after “LEAP”, delete parentheses after “LEAP”.

16. Paragraphs [79], [81], [83] italicise “LEAP”.

17. [88] line 3, remove comma after “database software”; line 8 insert “and” before “SalesCube”.

18. [89] line 5, italicise “Search Manager”.

19. [97] line 2, remove comma after “about”.

20. [103] line 8, insert semi-colon after “damages” and “remedies”; line 9, insert semi-colon after “delay”; line 10, insert semi-colon and “and” after “by the defendant”.

21. [108] line 2, capitalise “state”.

22. [109] delete first sentence.

23. [117] line 1, insert “Portal” after “Perfect”.

24. [119] end of paragraph, delete “is possible”.

25. [121] line 1, capitalise “reasonableness issue”.

26. [123] line 4, delete comma after “SAI Global Property’s”.

27. [133] line 3 and 4, change “The plaintiff” to “Mr Jones”, change “considerably” to “considerable”.

28. [139] line 12, after “structure” delete “in”; line 13, insert “that” after “something”.

29. [143] line 7, insert comma after “on”.

30. [150] line 5, after “Portal” insert “or SAI Global Property”.

31. [156] line 7, insert comma after “Tuesday”.

32. [157] order (2)(a) and (b), change “Plaintiff” to lowercase; order (5), insert comma after “Friday”.

Decision last updated: 01 May 2018