Wellard Rural Exports Pty Ltd v Robinson Iii
[2013] WASC 89
•18 MARCH 2013
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS
CITATION: WELLARD RURAL EXPORTS PTY LTD -v- ROBINSON III [2013] WASC 89
CORAM: ALLANSON J
HEARD: 15 MARCH 2013
DELIVERED : 18 MARCH 2013
FILE NO/S: CIV 1370 of 2013
BETWEEN: WELLARD RURAL EXPORTS PTY LTD
Plaintiff
AND
GARRY JOHN SHAWCROSS ROBINSON III
Defendant
Catchwords:
Interlocutory injunction - Restraint on employment with competitor - Restraint on using or disclosing confidential information - Whether employee in possession of confidential information - Turns on own facts
Legislation:
Nil
Result:
Injunction granted
Matter admitted to CMC list
Category: B
Representation:
Counsel:
Plaintiff: Mr M D Howard SC & Mr T J Palmer
Defendant: Mr S M Davies SC & Mr D R Chandler
Solicitors:
Plaintiff: DLA Piper
Defendant: Mendelawitz Morton
Case(s) referred to in judgment(s):
Amoco Australia Pty Ltd v Rocca Bros Motor Engineering Co Pty Ltd [1973] HCA 40; (1973) 133 CLR 288
Attorney‑General (Cth) v Adelaide Steamship Co Ltd [1913] AC 781
Australian Broadcasting Corporation v Lenah Game Meats Pty Ltd [2001] HCA 63; (2001) 208 CLR 199
Cactus Imaging Pty Ltd v Glenn Peters [2006] 71 NSWSC 717; (2006) NSWLR 9
Films Rover International Ltd v Cannon Film Sales Ltd [1987] 1 WLR 670
Glenwood Management Group Pty Ltd v Mayo [1991] 2 VR 49
Madaffari v Labenai Nominees Pty Ltd [2002] WASC 67
Nordenfelt v The Maxim Nordenfelt Guns and Ammunition Co Ltd [1894] AC 535
North‑Western Salt Company Ltd v Electrolytic Alkali Company Ltd [1914] AC 461
Putsman v Taylor [1927] 1 KB 637
Queensland Co-operative Milling Association v Pamag Pty Ltd [1973] HCA 24; (1973) 133 CLR 260
Smith v Nomad Modular Building Pty Ltd [2007] WASCA 169
SMS Rental (WA) Pty Ltd v Cahma Life Nominees Pty Ltd [2009] WASC 359
Todd v Novotny [2001] WASC 171
Twinside Pty Ltd v Venetian Nominees Pty Ltd [2008] WASC 110
Woolworths Ltd v Olson [2004] NSWCA 372
ALLANSON J: In Western Australia there are three major competitors in the market for live exports to the Middle East: Wellard Rural Exports Pty Ltd (Wellard), Livestock Shipping Services Pty Ltd (Livestock Shipping Services) and Emanuel Exports. The defendant, Garry John Shawcross Robinson III, was employed by Wellard as its General Manager Middle Eastern Sheep Operations from 2008 until he resigned on 12 December 2012. He is now employed by Livestock Shipping Services. In Mr Robinson's contract of employment with Wellard he agreed that he would not work for a competitor for a defined period after ceasing employment. Wellard seeks to hold him to that agreement and to restrain him from working for Livestock Shipping Services where he may use confidential information that he obtained in his employment with Wellard.
On 11 March 2013, Wellard filed a writ of summons commencing proceedings against Mr Robinson. In substance, Wellard claims:
1.It exports sheep and cattle from Australia to the Middle East.
2.From about 14 April 2008, it employed Mr Robinson as its General Manager Middle Eastern Sheep Operations. From 2010, Mr Robinson was employed under a written executive agreement.
3.By that agreement, Mr Robinson agreed to specified restrictions relating to use and disclosure of confidential information, soliciting of customers, and employment with a competitor. The restrictions were to continue after the end of his employment.
4.During the course of his employment Mr Robinson became aware of confidential information regarding Wellard and its business.
5.Mr Robinson resigned, and his employment ceased on 12 December 2012.
6.By 4 February 2013, Mr Robinson had commenced employment with Livestock Shipping Services Pty Ltd as its General Manager Livestock and Meat Trading Export Operations.
7.Livestock Shipping Services also exports sheep and cattle from Australia to the Middle East, and competes with Wellard.
Wellard seeks relief, including final injunctions restraining Mr Robinson from being employed, or involved or engaged in the business of Livestock Shipping Services until 13 December 2013. It also seeks injunctions restraining him from canvassing, soliciting or enticing away identified customers and identified potential customers of Wellard, and restraining him from using or disclosing confidential information.
In the present application, filed on 12 March, Wellard seeks interlocutory orders restraining Mr Robinson from being employed by or involved or engaged in the business of Livestock Shipping Services, canvassing or soliciting away the custom of persons identified in a schedule to the application, and directly or indirectly using or disclosing confidential information.
Before bringing this application, Wellard first approached Mr Robinson informally. It then sought an undertaking from Mr Robinson that he would cease employment at Livestock Shipping Services, but he would not give it.
Wellard has provided an undertaking as to damages in the usual form.
Interlocutory injunctions
The general principles which apply to an application for interlocutory relief are not in dispute: they are conveniently summarised in Twinside Pty Ltd v Venetian Nominees Pty Ltd WASC 110 [7] - [13]; see also SMS Rental (WA) Pty Ltd v Cahma Life Nominees Pty Ltd WASC 359. It is necessary to first identify the legal or equitable rights which are to be determined at trial and in respect of which final relief is sought: see Australian Broadcasting Corporation v Lenah Game Meats Pty Ltd [2001] HCA 63; (2001) 208 CLR 199 [11], [105]. The court may grant the injunction for the purpose of keeping matters in status quo until the parties' rights are determined at trial.
In considering whether Wellard has shown a sufficient likelihood of success to justify the preservation of the status quo pending the trial, I should have regard to the nature of the rights it asserts and the practical consequences likely to flow from the orders it seeks. The decision whether to grant the injunction involves balancing the injustice which might be suffered by Mr Robinson if the injunction is granted and Wellard later fails at trial, against the injustice which might be suffered by Wellard if the injunction is not granted, and it later succeeds: Films Rover International Ltd v Cannon Film Sales Ltd[1987] 1 WLR 670; Madaffari v Labenai Nominees Pty Ltd[2002] WASC 67 [14]. As the apparent strength of Wellard's case diminishes, the balance of convenience moves against the making of an order: Glenwood Management Group Pty Ltd v Mayo[1991] 2 VR 49, 54 - 55; Todd v Novotny [2001] WASC 171. Where there is uncertainty about whether final relief will be granted, and that uncertainty depends in whole or in part on a contested question of fact, it is generally not appropriate for the court to decide that factual question on the interlocutory application.
In this case, the interlocutory restraint sought would require Mr Robinson to give up his current employment, and restrain him from working in the livestock export industry until Wellard's claim can be finally determined. The evidence does not enable me to say whether the decision to grant or refuse relief will, in a practical sense, determine the substance of the matter in issue, at least if the matter can be programmed through to an early hearing and determination. I cannot say whether employment with Livestock Shipping Services will still be available to Mr Robinson if, in the future, the contractual restraints are held to be void.
Principles
A restraint of trade is contrary to the public interest and is void unless it is reasonable by reference to the interests of the parties concerned and reasonable by reference to the interests of the public. This requires the restraint to be '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': Nordenfelt v The Maxim Nordenfelt Guns and Ammunition Co Ltd [1894] AC 535, 565. In Smith v Nomad Modular Building Pty Ltd [2007] WASCA 169, McLure JA said at [8]:
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] HCA 90; (1914) 18 CLR 331 at 337 per Isaacs J; Buckley v Tutty [1971] HCA 71; (1971) 125 CLR 353 at 376.
The onus of showing that a covenant in restraint of trade is reasonable as between the parties lies on the party alleging that this is so: North‑Western Salt Company Ltd v Electrolytic Alkali Company Ltd [1914] AC 461, 470. The onus of showing that a contract in restraint of trade is injurious to the public interest lies on the party alleging that this is so: Attorney‑General (Cth) v Adelaide Steamship Co Ltd [1913] AC 781, 797.
The validity of the restraint must be decided as at the date of the contract: Amoco Australia Pty Ltd v Rocca Bros Motor Engineering Co Pty Ltd [1973] HCA 40; (1973) 133 CLR 288, 318. This can be important where, as here, Mr Robinson says that he cannot now recall information which Wellard says is confidential and worthy of protection, or would not attempt to use it. The question is whether the need to protect that information could be reasonably foreseen at the date of the contract so that the contractual restraint is reasonable. Subsequent developments may be looked at, not to determine whether the agreement was reasonable as between the parties when it was made, but to determine whether it was a reasonable one to make at the relevant time, having in mind the best estimate the parties could make for the future: Putsman v Taylor [1927] 1 KB 637, 643.
The court will give considerable weight to what parties have agreed and embodied in their contracts, but the contract cannot be regarded as conclusive (see, for example, Queensland Co-operative Milling Association v Pamag Pty Ltd [1973] HCA 24; (1973) 133 CLR 260, 268), even where, as here, there is a contractual admission as to reasonableness.
In Smith v Nomad Modular Building McLure JA said [12]:
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.
There is a particular interest in issue in this case, the protection of confidential information. This was not the only basis on which Wellard based its case, but it is, in my opinion, the decisive one on this interlocutory application.
The interests of an employer may extend to its trade secrets. A recognised method of protecting trade secrets is by restraining the employees who are given access to such information from taking up employment with a competitor: Woolworths Ltd v Olson[2004] NSWCA 372 [67]. Restraining an ex‑employee with confidential information from working for a competitor for a reasonable period may be appropriate even where the employee is otherwise under an obligation not to disclose the confidential information: Cactus Imaging Pty Ltd v Glenn Peters [2006] 71 NSWSC 717; (2006) NSWLR 9 [13] ‑ [14].
Even where the restraint is imposed under contract, the plaintiff should identify the information that is confidential and show why.
The contractual terms
Mr Robinson was employed under an executive agreement. The parties to the agreement include Wellard, his immediate employer, and Wellard Group Holdings Pty Ltd. His duties included:
•to develop annual and long range plans with the Board's guidance for the profitable operation of Middle Eastern Sheep Operations within the Rural and Trading Business Unit;
•to research and assess the viability of future opportunities to complement the existing operations;
•to explore strategic opportunities within the livestock sector which may add value to the division or other divisions within the Group.
The agreement defined 'Confidential Information' to mean:
any information in respect of the Company or Group Company or their businesses (including, but not limited to, any idea, concept, process or know-how) which is not in the public domain (other than as a result of the breach of confidence of the Company or any Group Company) which:
(a)comes to the Executive's notice in the course of the Executive's employment; or
(b)is generated by the Executive in the course of performing the Executive's obligations.
Under cl 11, Mr Robinson was required to keep any Confidential Information secret and confidential, take all reasonable steps to maintain secrecy and prevent disclosure, and not disclose it to any third party. The obligation survived the termination of the agreement: cl 11.2.
Clause 13 of the agreement is headed 'Protection of Company's Interests'. Relevantly, it provides:
13.1Restricted Areas and Restricted Activities
(a)Except with the consent of the Board, the Executive will not, directly or indirectly, whether solely or jointly with any other person;
(i)during the Restraint Period within the Geographical Area, carry on, or be engaged or involved in, any business or activity that competes with the business of the Company, or any Group Company, or any material part of those business';
(ii)during the Restraint Period, canvas, solicit or entice away from the Company or any Group Company, the custom of any person who was at the Termination Date, or at any time during the period of 12 months prior to the Termination Date, a client, customer, identified prospective customer, or agent of the Company or any Group Company;
(iii)during the Restraint Period, employ, solicit or entice away from the Company or any Group Company any person who was at the Termination Date or at any time during the period of 12 months prior to the Termination Date, an officer, manager, consultant or executive of the Company or any Group Company, whether or not that person would commit a breach of contract by reason of leaving the Company or any Group Company;
(iv)use or disclose or permit any other person to use or disclose any Confidential Information.
(v)use or register a name or trade mark which includes all or part of any business name, Trade Mark or the name of the Company or any Group Company or any confusingly similar work or words in such a way as to be capable of or be confused with any Business Name, Trade Mark or name of the Company or any Group Company;
(vi)attempt, council, procure or otherwise assist any person to do any of the acts referred to in this sub clause.
…
(c)For purpose of this clause 13;
(i)Geographical Area means Australia;
(ii)Restraint Period means the period of 12 months, 6 months or 3 months, whichever is the longest period permitted by law, from the Termination Date.
13.2Restraints Reasonable
(a)The Executive and the Company consider the restraints contained in this clause 13 to be reasonable and intend the restraints to operate to the maximum extent.
If these restraints:
(i)are void as unreasonable for the protection of the Company's interests; and
(ii)would be valid if part of the wording was deleted or the period or area was reduced,
(iii)the restraints will apply with the modifications necessary to make them effective.
13.3Restraints Independent
The restrains contained in this clause 13 are separate, distinct and several, so that the unenforceability of any restraint does not affect the enforceability of the other restraints.
13.4Executive's Acknowledgements
The Executive acknowledges that:
(a)The Executive will obtain Confidential Information concerning the business and finances of the Company and Group Companies including trade secrets and industrial processes;
(b)disclosure of Confidential Information could materially harm the Company;
(c)the restrictive covenants contained in this clause 13 are reasonable and necessary for the protection of the Company's goodwill;
(d)the remedy of damages may be inadequate to protect the Company's interests and the Company is entitled to seek and obtain injunctive relief, or any other remedy, in any court; and
(e)in view of the importance of the restraints contained in this clause 13 for the protection of the Company's proprietary interests, this clause will survive the termination of the Executive's employment with the Company in all circumstances including repudiation by the Company of the remainder of this agreement.
Mr Robinson had a salary and other benefits commensurate with an executive position.
The evidence
Wellard relied on an affidavit sworn 12 March 2013 by Mr Frederick Cesare Troncone, presently the Chief Executive Officer of Wellard. Mr Robinson relied on an affidavit, sworn by him on 15 March 2013.
The critical area of dispute was Wellard's claim that Mr Robinson had access to its confidential information, as defined, and that this information was truly a trade secret. In the amended statement of claim, Wellard identified the confidential information as information regarding:
(i)Wellard Exports, and, or Wellard Holdings' finances;
(ii)Wellard Exports customers, including their identity and contact details;
(iii)the prices that Wellard Exports offers to its customers;
(iv)tenders that Wellard Exports has submitted to potential customers, including details of the prices offered and how Wellard Exports calculates its tenders;
(v)Wellard Exports' budgets and business plans, including details of how those budgets are calculated and those plans formulated; and
(vi)how Wellard Exports' structures and operates its business.
Mr Troncone referred to the role played by Mr Robinson in marketing, which required him to be in regular contact with purchasers in the Middle East; his interaction with the livestock export industry in Australia, through industry groups and forums; his interaction with relevant government agencies such as the Australian Quarantine Inspection Service; and his role in overseeing operations at the Baldivis feedlot facility operated by Wellard. Mr Troncone did not, however, identify any information arising out of these activities that was not common knowledge in the industry.
Mr Troncone did, however, give evidence in greater detail on some specific matters. First, Mr Robinson knew the annual and monthly budget for his division, including its components, in detail. Second, Wellard used a Quote Build Load Invoice system (QBLI), by which it had a standard way to calculate prices across all its divisions. Mr Troncone deposed that this was not simply the price, which may be known throughout the industry, but how relevant variables, buying conditions and cost conditions are taken into account 'so that we know what is the acceptable margin and what the price should be'. Mr Troncone said the QBLI is composed of multiple spreadsheets, containing many variables, with each line 'underpinned by a formula that has been specifically developed for that line'. Mr Robinson used the QBLI system. Third, Mr Robinson knew about the Wellard Shipping Schedule, a spreadsheet which contained the shipping schedule but also linked in the budget for each shipment. Mr Troncone said: 'Having the budget linked can give you an idea of what your portfolio of shipments has done in the past but also gives an ability to forecast what your mix of shipments will do in the next period of time in terms of profitability'.
Mr Troncone deposed that Livestock Shipping Services is a direct competitor of Wellard.
He also put forward matters on which he based a suspicion that Mr Robinson had provided information to Livestock Shipping Services about a tender price put forward by Wellard in a competitive tender. Mr Robinson denies this allegation. It is not necessary for me to decide it.
The case for the defendant
Mr Robinson set out his qualifications and experience in the livestock export industry, including a period of about 10 years with the third major exporter in Western Australia, Emanuel Exports. I accept that his skills are highly specialised to the livestock export industry.
Mr Robinson disputes that he had access to a large volume of confidential information. He says that the nature of the industry is such that any information he did have on leaving Wellard was redundant or obsolete within a month of leaving. Further, the relevant factors in calculating input price are all either generally known within the industry or matters of public knowledge.
In particular, Mr Robinson says that the QBLI is nothing more than a spreadsheet and a budgeting tool. He does not have a copy of it, has not tried to recreate it, and could not if he tried. The financial data, shipment budgets and estimated costs of shipment, are information that he could not remember, and are historical and of little value as price is 'time critical and varies rapidly'.
Some of the customers to whom Mr Troncone referred, as customers of Wellard, are existing customers of Livestock Shipping Services. It is also relevant that, on Wellard's evidence, apart from two customers who are identified as major customers (BLC and Mawashi), Wellard's contact with the other identified customers is irregular. For example, one customer (Sokhna Livestock Company) was described as a longstanding customer, but one to whom the last export was made approximately 18 months ago.
Counsel for Mr Robinson also emphasised the generality of the matters set out in cl 9 of the statement of claim.
Counsel for Mr Robinson challenged the terms of the restraint clauses, focusing on cl 13, dealing individually with each component of the restraint (restraint on employment, restraint on soliciting and restraint on use of confidential information) by reference to its breadth, utility and certainty. Counsel challenged the breadth and utility of the geographical extent of the restraint, and the time period in the light of Mr Robinson's evidence about how rapidly information becomes obsolete in the industry.
Counsel also referred to the breadth and reasonableness of a restraint which applied not only to competition with Wellard, the direct employer, but also to other members of the Wellard Group.
Conclusion
In my opinion, Wellard has put on evidence which is sufficient to specifically identify confidential information in the QBLI and shipping schedules to justify, on an interlocutory basis, the imposition of some restraint. There may be factual questions which will disturb this preliminary finding. But those questions are not for determination at this stage.
There is no disagreement that Mr Robinson was an executive employee, and that he was directly engaged with the purchasers who were Wellard's clients. This is in a relatively small market (in number of participants, though not in value). Mr Robinson had direct access to Wellard's financial data, including for the Middle East division in which Livestock Shipping Services competes. He regularly used its QBLI and shipping schedule systems. Mr Troncone has sufficiently identified and described the information in these two systems to make out an arguable case that they include valuable and confidential information. Mr Robinson is now working for a direct competitor. To deny relief will deprive Wellard, probably permanently, of the benefit of contractual restraints which are not obviously invalid in protection of its confidential information, and to which Mr Robinson agreed.
There is no evidence that, should I restrain Mr Robinson and it is subsequently found the contractual restraints are wholly or partly ineffective, he will be unable to obtain further employment in the industry. Specifically, there was no evidence that Livestock Shipping Services would not employ him. And his own evidence is that, on resigning from Wellard, he had intended to take a break of some months from working in the industry.
There were some questions raised about the delay in bringing this application, Wellard having been aware of Mr Robinson's employment since about 4 February 2013. The evidence is that the CEO of Wellard approached Mr Robinson informally in mid‑February, suggesting that he 'do the right thing'. On 28 February, solicitors for Wellard formally asked Mr Robinson to give an undertaking not to breach the contractual restraints. Mr Robinson did not give an immediate answer. The application was brought on 11 March. I am not satisfied that the delay is such as to warrant denying relief.
The relief sought goes beyond what is necessary to maintain the status quo pending the hearing of this matter. The relief sought in pars 2.1 and 2.3 of the amended chamber summons for interlocutory injunction are sufficient. That is:
Until further order the defendant be restrained whether directly or indirectly, whether solely or jointly with any other person within Australia, from:
being employed in any way by, or involved or engaged in any way in, the business of Livestock Shipping Services Pty Ltd;
directly or indirectly using or disclosing Confidential Information (as that term is defined in the schedule 2 hereto) relating to the plaintiff or any Group Company (as that term is defined in the schedule 2 hereto).
Finally, this matter should be entered into the CMC list and programmed to the earliest practicable hearing. There will be liberty to apply.
Annexure A
Schedule 2
'Confidential Information' means any information in respect of the plaintiff or Wellard Group Holdings Pty Ltd (ACN 009 263 423) or their businesses (including, but not limited to, any idea, concept, process or know‑how) which is not in the public domain which:
(a)Came to the defendant's notice in the course of the defendant's employment with the plaintiff; or
(b)Was generated by the defendant in the course of performing the defendant's obligations.
'Group Company' means a 'related body corporate' of the plaintiff as that expression is defined in the Corporations Act 2001 (Cth) including Group Holdings Pty Ltd (ACN 009 263 423).