UP Australia Pty Ltd v McDonald - [2018] NSWSC 218

Supreme Court

New South Wales

Medium Neutral Citation: UP Australia Pty Ltd v McDonald & Anor [2018] NSWSC 218
Hearing dates: 21 February 2018
Date of orders: 23 February 2018
Decision date: 28 February 2018
Jurisdiction: Equity
Before: Slattery J
Decision:
Interlocutory injunctions granted against both defendants. Matter referred to Expedition List on 2 March 2018.

Catchwords: EQUITY - interlocutory injunctions - serious question to be tried - balance of convenience - interests associated with the first defendant to sell a gym business to the plaintiff - second defendant is employed as a mentor within the gym business from the time of the sale - post-sale restraints agreed to by the first defendant - second defendant leaves the employment of the plaintiff and proposes to work for first defendant - whether first defendant’s business competes with the plaintiff’s business - whether the second defendant’s proposed employment with the first defendant should be restrained pending final hearing.
Legislation Cited: Civil Procedure Act 2005, s 26
Supreme Court Act 1970, s 66(4)
Cases Cited: Australian Broadcasting Corporation v Lenah Game Meats Pty Ltd (2001) 208 CLR 199
Australian Broadcasting Corporation v O’Neill (2006) 227 CLR 57
Beecham Group Limited v Bristol Laboratories Pty Limited (1968) 118 CLR 618
Beese v Woodhouse [1970] 1 WLR 586
Buckley & Ors v Tutty (1971) 125 CLR 353
John Fairfax Publications Pty Ltd v Birt & Ors [2006] NSWSC 995
Kearney v Craepoldi & Ors [2006] NSWSC 23
Kores Manufacturing Co Ltd v Kolok Manufacturing Co Ltd [1959] Ch 108
Kolback Securities Ltd v Epoch Mining (1987) 8 NSWLR 533
McCarty v Council of the Municipality of North Sydney (1918) 18 SR (NSW) 210
Stacks Taree v Marshall (No. 2) [2010] NSWSC 77
Trego v Hunt [1896] AC 7
Texts Cited: JD Heydon, MJ Leeming and PG Turner, Meagher, Gummow & Lehane’s Equity: Doctrines & Remedies (5th ed 2014, LexisNexis Butterworths)
Category: Procedural and other rulings
Parties: Plaintiff: UP Australia Pty Ltd
First Defendant: Daine McDonald
Second Defendant: Mark Carroll
Representation:
Counsel:

Plaintiff: D. Mahendra
First Defendant: D. Stewart
Second Defendant: A. Perigo

Solicitor:
Plaintiff: Scarlet Reid, McCullough Robertson Lawyers
First Defendant: Walter MacCallum, Aitken Lawyers Pty Ltd
Second Defendant: Adrian Barwick, Williamson Barwick

File Number(s): (2018/40953)
Publication restriction: No

Judgment

The plaintiff, UP Australia Pty Limited (“UP Australia”), owns and conducts a gym business in Kent Street Sydney which it conducts under the name “Clean Health Kent Street”. The plaintiff purchased the gym business in December 2016 from interests associated with Mr Daine McDonald, the first defendant, for a consideration of approximately $800,000 (“the December 2016 contract”). At the time of that acquisition the second defendant, Mr Mark Carroll, was the head trainer at the business.
The December 2016 contract and its associated documents contained restraints on both the sellers and Mr McDonald from working in competition with the plaintiff in a way which might damage the goodwill the plaintiff had acquired in the business. After the business acquisition, the plaintiff employed Mr Carroll, in…

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: [2018] NSWSC 218
Decision Date: 28 February 2018

CaseChat Overview and Summary

UP Australia Pty Ltd brought an action against its former employee, who had left to work for a competing business, and that business itself. The plaintiff sought an interlocutory injunction to restrain the former employee from working for the competing business, which was owned by the first defendant, until the matter was finally determined. The Federal Court of Australia was tasked with determining whether an interlocutory injunction should be granted.

The court was required to consider whether the plaintiff had raised a serious question to be tried on the merits of the case. Additionally, the court needed to assess the balance of convenience to determine whether the plaintiff would suffer irreparable harm if the injunction was not granted. The court also needed to consider the interests of the parties involved, including the impact on the first defendant's business and the former employee's employment prospects.

The court found that the plaintiff had raised a serious question to be tried, as there was a genuine dispute regarding the enforceability of the post-sale restraints agreed to by the first defendant. The court also considered the balance of convenience, determining that the plaintiff would suffer significant harm if the former employee was allowed to work for the competing business. The court held that the interests of the first defendant and the former employee did not outweigh the plaintiff's interests in protecting its business. As a result, the court granted the plaintiff's application for an interlocutory injunction, restraining the former employee from working for the first defendant until the matter was finally determined.

The court ordered that the former employee be restrained from working for the first defendant until the matter was finally determined. The court also ordered that the first defendant provide an undertaking as to costs, should the plaintiff ultimately be unsuccessful in the case. This decision highlights the importance of protecting a business's interests and the potential consequences for parties who seek to undermine those interests by breaching post-sale restraints.

Orders