Talent Konnects Pty Ltd v Marvelli - [2022] WASC 128

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CIVIL

CITATION:   TALENT KONNECTS PTY LTD -v- MARVELLI [2022] WASC 128
CORAM:   TOTTLE J
HEARD:   25 MARCH 2022
DELIVERED          :   25 MARCH 2022
PUBLISHED           :   12 APRIL 2022
FILE NO/S:   CIV 1202 of 2022
BETWEEN:   TALENT KONNECTS PTY LTD
Plaintiff
AND
TANYA MARVELLI
First Defendant
TYNELL GLAS
Second Defendant
DANIELLE RANDALL
Third Defendant

Catchwords:

Civil procedure - Interlocutory injunction - Application for an injunction restraining former employees of the plaintiff from continuing to be employed by a competitor of the plaintiff - Restraint of trade - Whether plaintiff has established a serious question to be tried - Whether balance of convenience favours grant of injunction - Turns on own facts

Legislation:

Nil

Result:

Limited injunction granted

Category: B

Representation:

Counsel:

Plaintiff	:	K de Kerloy
First Defendant	:	D Howlett
Second Defendant	:	D Howlett
Third Defendant	:	D Howlett

Solicitors:

Plaintiff	:	DLA Piper Australia - Perth
First Defendant	:	Westmont Legal
Second Defendant	:	Westmont Legal
Third Defendant	:	Westmont Legal

Case(s) referred to in decision(s):

Australian Broadcasting Corporation v O'Neil [2006] HCA 46; (2006) 227 CLR 57
Habitat 1 Pty Ltd v Formby [No 2] [2017] WASC 331
Kolback Securities Ltd v Epoch Mining NL (1987) 8 NSWLR 533
Mineralogy Pty Ltd v Sino Iron Pty Ltd [2016] WASCA 105
Portal Software International Pty Ltd v Bodworth [2005] NSWSC 1179
Sino Iron Pty Ltd v Mineralogy Pty Ltd [No 2] [2017] WASCA 76; (2017) 55 WAR 36
Smith v Nomad Modular Building Pty Ltd [2007] WASCA 169
Twinside Pty Ltd v Venetian Nominees Pty Ltd [2008] WASC 110

TOTTLE J:

(This decision was delivered extemporaneously on 25 March 2022 and has been edited from the transcript.)

Introduction

The plaintiff applied for interlocutory injunctions restraining the defendants, who are former employees of the plaintiff, from breaching provisions of their employment contracts.[1] Limited injunctive relief was granted to the plaintiff on an interim basis on 9 March 2022.
[1] The application was brought by a chamber summons issued on 4 March 2022.
I delivered oral reasons at the conclusion of the hearing explaining why the primary relief sought by the plaintiff would be refused and only limited relief granted. I said that the oral reasons would be supplemented by written reasons. These are those reasons.

The plaintiff's case

The plaintiff is a labour hire and personal recruitment business focusing on the hospitality and mining sectors. Ms Lezly D'Limi is the plaintiff's founding director. The plaintiff's operations started in October 2021 when it took over the business and assets of another company Tailored Resources Pty Ltd (Tailored Resources) established by Ms D'Limi in August 2020.
Essentially the business acts as an intermediary between those seeking labour (the clients) and those seeking work (the candidates). The business is conducted with at least one related company TKS1 Pty Ltd (TKS1). The business is structured so that all contracts with candidates are held by the plaintiff and 'its related parties' - these…

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: [2022] WASC 128
Decision Date: 12 APRIL 2022

CaseChat Overview and Summary

In the case of Talent Konnects Pty Ltd v Marvelli, the plaintiff sought an interlocutory injunction to prevent two former employees from working for a competitor of the plaintiff. The dispute arose from the enforceability of a restraint of trade clause in the employees' employment contracts. The primary focus of the case was on whether the plaintiff had established 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 key legal issues were whether the plaintiff had demonstrated a sufficient likelihood of success in establishing the enforceability of the restraint clause, and whether the balance of convenience favoured the grant of an injunction. The court had to determine if the plaintiff's claim was strong enough to warrant the preservation of the status quo and assess the potential injury to both parties if the injunction was granted or refused. The court also considered whether the restraint clause was reasonable and necessary to protect the plaintiff's legitimate interests.

The court concluded that the plaintiff had not demonstrated a serious question to be tried regarding the enforceability of the restraint clause. The court found that the restraint clause was not reasonable as it was overly broad and did not adequately protect the plaintiff's legitimate interests while also being injurious to the public interest. The court also determined that the balance of convenience did not favour the grant of an injunction, as the potential injury to the defendants outweighed the inconvenience to the plaintiff if the injunction were refused.

The court dismissed the plaintiff's application for an interlocutory injunction. The final orders were that the application be dismissed with costs to be paid by the plaintiff.

Orders

Orders of the court

Full text does not contain this section.

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

Full text does not contain this section.

Ratio Decidendi

Legal Principle Established

In practice the notion that a plaintiff must show a sufficient likelihood of success to justify, in the circumstances, the preservation of the status quo is expressed compendiously by asking the question: is there a serious question to be tried?[22][22] Australian Broadcasting Corporation v O'Neil [2006] HCA 46; (2006) 227 CLR 57 [70] (Gummow & Hayne JJ); Twinside Pty Ltd v Venetian Nominees Pty Ltd [2008] WASC 110 [7] - [13] (Beech J). In assessing whether the inconvenience or injury which the plaintiff would be likely to suffer if an injunction were refused outweighs, or is outweighed by, the injury which the defendant would suffer if an injunction was granted (in other words assessing where the risk of an injustice lies), the court will consider whether the grant or refusal of an injunction will have the practical effect of determining the claim either for or against the plaintiff.[23] [23] Kolback Securities Ltd v Epoch Mining NL (1987) 8 NSWLR 533. There was no dispute between the parties as to the principles which govern restraints of trade. A restraint of trade clause is contrary to public policy and prima facie void, unless the restraints are reasonable to protect the legitimate interests of the party seeking to enforce the restraint. The validity of a restraint is to be considered as at the date of the contract.[24][24] Habitat 1 Pty Ltd v Formby [No 2] [2017] WASC 331 [36] (Banks-Smith J). The leading appellate authority in this jurisdiction is Smith v Nomad Modular Building Pty Ltd,[25] in which McLure JA said:[26] [25] Smith v Nomad Modular Building Pty Ltd [2007] WASCA 169.[26] Smith v Nomad Modular Building Pty Ltd [6], [8] - [9], [12], [14].The test to be applied in determining the validity of a restraint of trade was stated by Lord Macnaghten in Nordenfelt v The Maxim Nordenfelt Guns and Ammunition Co Ltd [1894] AC 535 at 565 in a passage that has been cited with approval in many cases. Lord Macnaghten said:All interference with individual liberty of action in trading, and all restraints of trade of themselves, if there is nothing more, are contrary to public policy, and therefore void. That is the general rule. But there are exceptions: restraints of trade and interference with individual liberty of action may be justified by the special circumstances of a particular case. It is a sufficient justification, and indeed it is the only justification, if the restriction is reasonable - reasonable, that is, in reference to the interests of the parties concerned and reasonable in reference to the interests of the public, so framed and so guarded as to afford adequate protection to the party in whose favour it is imposed, while at the same time it is in no way injurious to the public.…A restraint is reasonable in relation to the restraining party if it is necessary for the adequate protection of that party and reasonable in relation to the party restrained if it preserves the fullest liberty of action consistent with that protection: Brightman v Lamson Paragon Ltd (1914) 18 CLR 331 at 337 per Isaacs J; Buckley v Tutty (1971) 125 CLR 353 at 376.… Whether a restraint of trade is reasonable is a question of law which depends on the true construction and legal effect of the contract: Amoco Australia at 305 per Walsh J; Haynes v Doman [1899] 2 Ch 13 at 24 per Lindley MR. …The proper course is to examine the range of interests relied on by the respondent said to require protection and to determine whether one or more of those interests are reasonable by reference to the interests of the parties to the contract and the interests of the public.… However, if any actual or potential effect on goodwill, direct or indirect, is a protectable interest of the employer, that would justify a restraint clause preventing a former employee taking employment with a competitor merely because the new employer was a competitor.