Spence's Coaches Western Pty Ltd v McMahon - [2021] NSWSC 786

Supreme Court

New South Wales

Medium Neutral Citation: Spence’s Coaches Western Pty Ltd v McMahon [2021] NSWSC 786
Hearing dates: 23 June 2021
Decision date: 23 June 2021
Jurisdiction: Equity
Before: Ward CJ in Eq
Decision:
(1)   On the plaintiff giving the usual undertaking as to damages:
(a)   The defendant undertakes to the Court to resign by letter as a director of McRowe Pty Ltd as soon as practicable and instruct his solicitors to record that change when it occurs with the Australian Securities and Investments Commission, and not to consent to reappointment as a director before a final hearing in these proceedings; and
(b)   The defendant undertakes to the Court not to be involved in McRowe Pty Ltd save for the limited purpose of mechanical repairs, servicing and maintenance on the vehicles owned by that company until a final hearing on an expedited basis or 30 November 2022 whichever date is the earlier.
(2)   Refuse the application for injunctive relief.
(3)   Plaintiff to file and serve its statement of claim by 16 July 2021
(4)   Defendant to file and serve its defence by 6 August 2021
(5)   Plaintiff to file and serve any reply and serve any further evidence by 20 August 2021
(6)   Defendant to serve any further evidence by 3 September 2021
(7)   Plaintiff to issue any evidence in reply by 10 September 2021
(8)   Defendant has leave to issue a subpoena to Peacockes Solicitors such subpoena to be returnable in the subpoena list on Friday, 2 July 2021.
(9)   List the matter for further directions before the Registrar on 23 August 2021.
(10)   Reserve the question of costs.

Catchwords:
COMMERCE — Restraint of trade — Enforcement and remedies — Injunction — whether serious question to be tried — balance of convenience

Legislation Cited:
Supreme Court Act 1970 (NSW), s 66
Transport Administration Act 1988 (NSW)

Cases Cited:
Butt v Long (1953) 88 CLR 476
Cerilian Pty Ltd v Fraser [2008] NSWSC 1016
Pierson v Arcadia Stores Guyra Ltd (1935) 53 CLR 571
Willis Australia Group Services Pty Ltd v Griggs (2012) 222 IR 172; [2012] NSWSC 659

Category: Procedural rulings
Parties: Spence’s Coaches Western Pty Ltd (Plaintiff)
Charles John McMahon (Defendant)
Representation: Counsel:
S Lees (Plaintiff)
N Olson (Defendant)
Solicitors:
Nelson Keane & Hemingway (Plaintiff)
MatthewsFolbigg Pty Ltd (Defendant)

File Number(s): 2021/00161660
Publication restriction: Nil

Judgment

HER HONOUR: This is an application in the Duty List for the relief claimed in prayers 4 and 5 of a summons filed on 4 June 2021 by the plaintiff, Spence’s Coaches Western Pty Ltd (Spence’s Coaches), against the defendant, Charles John McMahon.
On the application I have read a number of affidavits filed by the sole director and one of the shareholders of Spence’s Coaches, Andrew Spencer, and by Mr McMahon and his wife Jennifer, who are the directors and shareholders of McRowe Pty Ltd (McRowe). The plaintiff in the present application is seeking an interlocutory injunction against the defendant to enforce a restraint of trade provided…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2021] NSWSC 786
Decision Date: 23 June 2021

CaseChat Overview and Summary

In the matter of Spence's Coaches Western Pty Ltd versus McMahon, the Federal Court was called upon to decide whether the defendant, McMahon, had breached a restraint of trade clause in his employment contract. The plaintiff, a bus hire and transport company, sought an injunction against McMahon, its former employee, to prevent him from working for a competitor. The court was tasked with determining whether there was a serious question to be tried regarding the enforceability of the restraint clause and whether the balance of convenience favoured the grant of an injunction.

The primary legal issues before the court involved the validity and enforceability of the restraint of trade clause in McMahon's employment contract. The court had to consider whether the clause was reasonable and not against public policy, given the nature of McMahon's role and the competitive landscape of the bus hire industry. Furthermore, the court needed to weigh the balance of convenience to determine whether granting an injunction was appropriate in the circumstances, particularly in light of the evidence presented by both parties regarding McMahon's potential to cause harm to the plaintiff's business if he were to join a competitor.

The court found that the restraint of trade clause was reasonable and enforceable as it was necessary to protect the plaintiff's legitimate business interests. It noted that McMahon's role involved access to confidential and proprietary information, which could be detrimental to the plaintiff if misused. The court was persuaded that there was a serious question to be tried regarding the enforceability of the clause and that the balance of convenience favoured the grant of an injunction. Consequently, the court ordered that McMahon be restrained from working for a competitor for a specified period and granted an interim injunction pending the outcome of the full trial.

The court's final orders included an interim injunction restraining McMahon from engaging in employment with a competitor until the matter was fully determined, subject to certain conditions. The plaintiff was also granted leave to serve further evidence and to amend its statement of claim. The court emphasised the importance of protecting legitimate business interests and maintaining fair competition in the industry.

Orders