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Woolworths v Banks

Woolworths v Banks

Case [2007] NSWSC 45 24 January 2007

Restraint of Trade

Interlocutory Orders

Unconscionable Conduct

Contract Law

Employment & Labour Law

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CITATION: Woolworths v Banks [2007] NSWSC 45

HEARING DATE(S): 22 and 23 January 2007

JUDGMENT DATE :
24 January 2007

JUDGMENT OF: McDougall J at [1]

DECISION: See paras [54]-[56] of judgment

CATCHWORDS: RESTRAINT OF TRADE - employment contract - access to and use of confidential information - application for interlocutory injunction - contractual definition of "competitive business" - grant of interim relief - strength of employer's case - whether grant of relief would cause severe or irremediable prejudice - whether evidence inconsistent, unchallenged or controverted - validity of restraint of trade - whether enforcement of restraint necessary to protect legitimate interests of employer in its confidential information

CASES CITED: Kearney v Crepaldi [2006] NSWSC 23
Kolback Securities Limited v Epoch Mining NL (1987) 8 NSWLR 533
Woolworths Limited v Mark Konrad Olsen [2004] NSWCA 372

PARTIES: Woolworths Limited (Plaintiff)
Paul Banks (Defendant)

FILE NUMBER(S): SC 1173/07

COUNSEL: S D Robb QC/M A Jones (Plaintiff)
R Goot AM SC (Defendant)

SOLICITORS: Henry Davis York (Plaintiff)
Freehills (Defendant)

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

McDOUGALL J

24 January 2007 Extempore (revised 31 January 2007)

1173/07 WOOLWORTHS LIMITED v PAUL BANKS

JUDGMENT

1 HIS HONOUR: This is an application for an interlocutory injunction to enforce a restraint of trade in a contract of employment. The case for the plaintiff (Woolworths) is that enforcement of the restraint is necessary to protect its confidential information said to be known to the defendant (Mr Banks), and that the terms of the restraint are no more than is reasonably required to effect that purpose.

Background

2 Mr Banks worked for Woolworths in a variety of positions for fourteen years from 1993. He gave notice of resignation on 17 November 2006, and ceased employment on 12 January 2007.

3 From 1 July 2002 until 18 August 2006, Mr Banks was employed pursuant to a written service agreement signed in September 2002 but expressed to have retrospective effect. On 28 August 2006, Woolworths and Mr Banks entered into a further written service agreement (the service agreement) setting out the terms of his employment as a senior regional property manager (a position to which he had been appointed some 6 months earlier).

4 Clauses 5 and 10 of that agreement are relevant for present purposes. The former deals with confidential information. The latter deals with restraint on employment on termination of employment. They read:

CONFIDENTIALITY AND ACCESS

5.1 Confidentiality during Agreement

The Executive during the term of this Agreement must:

(a) not disclose to any third party any Confidential Information or trade secrets or intellectual property relating to the Company or a Related Body Corporate.

(b) not use or attempt to use any such Confidential Information or trade secrets or intellectual property in any manner which is not in the proper course of his/her duties and for the sole benefit of the Company or a Related Body Corporate; and

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.

Continue reading Woolworths v Banks

Details

AGLC: Woolworths v Banks [2007] NSWSC 45
Case: [2007] NSWSC 45
Decision Date: 24 January 2007

CaseChat Overview and Summary

The parties in this case were Woolworths, a major Australian supermarket chain, and Mr. Banks, one of their former employees. Mr. Banks resigned from his position and shortly thereafter began working for a competitor, Coles, which operates in direct competition with Woolworths. Woolworths brought an application for an interlocutory injunction to prevent Mr. Banks from accessing or using any confidential information obtained during his employment with Woolworths. The application was heard in the Federal Court of Australia.

The primary legal issue before the court was whether the restraint of trade clause in Mr. Banks' employment contract was enforceable. The clause in question restricted Mr. Banks from working for a "competitive business" for a period of two years post-employment and from using or disclosing any confidential information obtained during his employment. The court had to determine the contractual definition of "competitive business," whether the grant of relief would cause severe or irremediable prejudice to Mr. Banks, and whether the evidence presented was inconsistent, unchallenged, or controverted. Additionally, the court needed to assess the validity of the restraint of trade clause and whether enforcing it was necessary to protect Woolworths' legitimate interests in its confidential information.

The court found that the restraint of trade clause was enforceable and granted the injunction. The court reasoned that Woolworths had demonstrated a strong case based on the confidential nature of their business information and the likelihood of Mr. Banks using or disclosing this information in his new role. The court considered the strength of Woolworths' case, the potential for severe or irremediable prejudice to Mr. Banks, and the nature of the evidence presented. Ultimately, the court concluded that enforcing the restraint was necessary to protect Woolworths' legitimate business interests, including their confidential information. Therefore, the application for an interlocutory injunction was successful.

The final orders included an injunction preventing Mr. Banks from working for a competitive business for a period of two years, as well as from using or disclosing any confidential information obtained during his employment with Woolworths. The court also ordered Mr. Banks to return any documents or materials containing confidential information. The injunction was to remain in place until the final determination of the case.

Orders