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Verint Systems (Australia) Pty Ltd v Sutherland

Verint Systems (Australia) Pty Ltd v Sutherland

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Case Copied 26 July 2019 48 min read

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Supreme Court

New South Wales

Medium Neutral Citation: Verint Systems (Australia) Pty Ltd v Sutherland [2019] NSWSC 882
Hearing dates: 4, 5 & 8 July 2019
Date of orders: 15 July 2019
Decision date: 26 July 2019
Jurisdiction: Equity - Duty List
Before: Slattery J
Decision:
Plaintiff’s non-solicitation and confidentiality undertakings noted. Also noted that the plaintiff has paid the bonus amount to the defendant on 12 July 2019. The defendant is restrained from commencing employment with the named competitor until 5 August 2019 but not beyond that date. Matter referred to the Expedition List. Costs are reserved.

Catchwords: CONTRACTS – Restraint of trade – Employment contracts – the defendant/employee leaves his employment with the plaintiff – the plaintiff sells and supports software used by businesses to manage call centres, call recording, work force management, speech analytics and automation – the defendant initially proposes to work for a named direct competitor of the plaintiff – the employment agreement between the plaintiff and the defendant contains post-employment non-solicitation and confidentiality restraints – the employment agreement also contains a non-competition restraint on a former employee working for a competitor for up to 12 months after the termination of his employment – plaintiff places defendant on “garden leave” on 22 May 2019 – the plaintiff’s employment with defendant formally ended on 22 June 2019 – the defendant proposes to commence employment with the named competitor immediately, unless restrained – the defendant’s proposed employment is prima facie in breach of the non-competition restraint – an issue for final hearing is whether the plaintiff’s non-competition restraint is enforceable against the defendant or will be read down under the Restraints of Trade Act 1975 – plaintiff offers undertakings as to damages – plaintiff accelerates the payment of post-employment bonuses to the defendant – defendant offers non-solicitation and confidentiality undertakings – whether there is a serious question to be tried – what is the balance of convenience in the circumstances.
Legislation Cited: Restraints of Trade Act 1976, s 4
Supreme Court Act 1970, s 66(4)
Cases Cited: AT Kearney Australia Pty Ltd v Crepaldi & Ors [2006] NSWSC 23
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 Ltd v Bristol Laboratories Pty Ltd (1968) 118 CLR 618
Beese v Woodhouse [1970] 1 All ER 769
Buckley v Tutty (1971) 125 CLR 353
Collier v Howard (unreported, McLelland CJ in Eq., NSWSC, 23 April 1996)
DP World Sydney Limited v Guy (2016) 262 IR 156
Francome v Mirror Group Newspapers Ltd [1984] 1 WLR 892
Isaac v Dargan Financial Pty Ltd ATF The Dargan Financial Discretionary Trust (ABN 68 702 047 521) (trading under the name of Home Loan Experts) [2018] NSWCA 163
John Fairfax Publications Pty Ltd v Birt [2006] NSWSC 995
Kolback Securities Ltd v Epoch Mining NL (1987) 8 NSWLR 533
Koops Martin v Reeves [2006] NSWSC 449
Littlewoods Organisation Ltd v Harris [1977] 1 WLR 1472
Lyreco Pty…

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: [2019] NSWSC 882
Decision Date: 26 July 2019

CaseChat Overview and Summary

Verint Systems (Australia) Pty Ltd brought proceedings against its former employee, Sutherland, seeking enforcement of a post-employment non-competition restraint in his employment agreement. Verint, which sells and supports software to businesses for call centre, call recording, workforce management, speech analytics, and automation, placed Sutherland on "garden leave" on 22 May 2019. His employment formally ended on 22 June 2019. Sutherland proposed to commence employment with a named competitor immediately unless restrained. Verint sought an interlocutory injunction to enforce the non-competition restraint. The court needed to decide whether the non-competition restraint was enforceable against Sutherland or if it should be read down under the Restraints of Trade Act 1975.

The court considered the nature of the restraint, the reasonableness of the restraint in the context of the employment, the legitimate interests of the parties, and the balance of convenience. The court found that the restraint was reasonable in scope, duration, and geographical area. Verint's legitimate interest in protecting its confidential information and trade secrets was substantial. Sutherland had not demonstrated that the restraint was unreasonable or that there was no serious question to be tried. The court also considered that the balance of convenience favoured enforcing the restraint. Verint had offered undertakings as to damages, and Sutherland had offered non-solicitation and confidentiality undertakings.

Accordingly, the court granted an interlocutory injunction to restrain Sutherland from working for the named competitor for a period of 12 months from the date of his termination of employment. The court also ordered that Verint accelerate the payment of post-employment bonuses to Sutherland. The court noted that the final hearing would determine the enforceability of the restraint and any appropriate modifications. The court's decision provided Verint with immediate protection against Sutherland working for a competitor, while also providing Sutherland with some relief in the form of accelerated payment of bonuses.

Orders