Workplace Access and Safety Pty Ltd v Mackie - [2014] WASC 62

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION: WORKPLACE ACCESS AND SAFETY PTY LTD -v- MACKIE [2014] WASC 62

CORAM: EDELMAN J

HEARD: 28 FEBRUARY 2014

DELIVERED : 28 FEBRUARY 2014

FILE NO/S: CIV 1251 of 2014

BETWEEN: WORKPLACE ACCESS AND SAFETY PTY LTD
Plaintiff
AND
DAMIAN MACKIE
Defendant

Catchwords:

Interlocutory injunctions - Application for injunction to restrain the defendant from accepting employment with a competitor of the plaintiff - Restraint of trade clause - Balance of convenience

Legislation:

Nil

Result:

Application dismissed on undertakings from the Defendant

Category: B

Representation:

Counsel:

Plaintiff: Mr M Holler
Defendant: In Person

Solicitors:

Plaintiff: Kliger Partners
Defendant: In person

Cases referred to in judgment:

AB Hassle v Pharmacia (Australia) Pty Ltd (1995) 33 IPR 63
Amoco Australia Pty Ltd v Rocca Bros Motor Engineering Co Pty Ltd [1973] HCA 40; (1973) 133 CLR 288
Attwood v Lamont [1920] 3 KB 571
Australian Broadcasting Corporation v O'Neill [2006] HCA 46; (2006) 227 CLR 57
BDO Group Investments (NSW-VIC) Pty Ltd v Ngo [2010] VSC 206
Boyd v Wild Hibiscus Flower Company Pty Ltd (No 2) [2012] FCA 74
Brightman v Lamson Paragon Ltd [1914] HCA 90; (1914) 18 CLR 331
Buckley v Tutty [1971] HCA 71; (1971) 125 CLR 353
Cerilian Pty Ltd v Fraser [2008] NSWSC 1016
Cohen v iSOFT Group Pty Ltd [2013] FCAFC 49; (2013) 218 ALR 516
Commissioner of Taxation v Sara Lee Household & Body Care (Australia) Pty Ltd [2000] HCA 35; 172 ALR 346
Complete Field Maintenance Pty Ltd v Coulson [2013] WASC 374
Concut Pty Ltd v Worrell [2000] HCA 64; (2000) 176 ALR 693
Donoghue v Commissioner of Taxation [2013] FCA 84
Emeco International Pty Ltd v O'Shea (No 2) [2012] WASC 348
Federated Mutual Insurance Co of Australia Ltd v Sabine [1920] SALR 284
Huhtamaki Australia Ltd v Botha [2004] NSWSC 386
I F Asia Pacific Pty Ltd v Galbally [2003] VSC 192; (2003) 59 IPR 43
Instyle Contract Textiles Pty Ltd v Good Environmental Choice Services Pty Ltd (No 2) [2010] FCA 38
Jardin v Metcash Ltd [2011] NSWCA 409; (2011) 285 ALR 677
John Fairfax Publications Pty Ltd v Birt [2006] NSWSC 995
Kolback Securities Ltd v Epoch Mining NL (1987) 8 NSWLR 533
Marley New Zealand Ltd v Icon Plastics Pty Ltd [2007] FCA 851
Mason v Provident Clothing & Supply Co Ltd [1913] AC 724
Medrad Inc v Alpine Medical Pty Ltd [2009] FCA 949; (2009) 82 IPR 101
Mineralogy Pty Ltd v Sino Iron Pty Ltd (No 2) [2013] WASC 375
Nordenfelt v The Maxim Nordenfelt Guns and Ammunition Co Ltd [1894] AC 535
Putsman v Taylor [1927] 1 KB 637
Quinn v Jack Chia (Australia) Ltd [1992] 1 VR 567
Samsung Electronics Co Ltd v Apple Inc [2011] FCAFC 156; (2011) 286 ALR 257
Smith v Nomad Modular Building Pty Ltd [2007] WASCA 169
Twinside Pty Ltd v Venetian Nominees Pty Ltd [2008] WASC 110
Wellard Rural Exports Pty Ltd v Robinson III [2013] WASC 89
Willis Australia Group Services Pty Ltd v Griggs [2012] NSWSC 659; (2012) 222 IR 172

Table of Contents

Introduction
Factual disputes
The business of Workplace
Mr Mackie's role at Workplace
Mr Mackie leaves Workplace and begins work for Roofsafe
The relevant principles for an interlocutory injunction
A serious question to be tried

The restraint of trade clause
Did the restraint of trade clause terminate with Mr Mackie's promotion?
Principles concerning enforceability of the restraint of trade clause
Did the restraint of trade clause reasonably protect a legitimate interest?

The balance of convenience and adequacy of damages

Conclusion
Appendix 1: The confidentiality clause

EDELMAN J:

Introduction

This is an interlocutory application by the plaintiff, Workplace, to restrain its former employee, Mr Mackie, from working for a rival company called Roofsafe Industrial Safety (Roofsafe). Workplace relies upon a restraint of trade clause in Mr Mackie's 26 May 2012 agreement.
This application was necessarily brought with great haste. Although Mr Holler's oral submissions admirably attempted to fill some evidentiary deficiencies, there remain significant gaps in the evidence of both parties that will need to be addressed at trial. There are also difficult questions concerning the enforceability of the restraint of trade clause which may depend on this missing evidence.
Having regard to all the evidence currently before the Court my conclusion is that Workplace has a prima facie case that it can restrain Mr Mackie from employment with Roofsafe, but that the balance of convenience requires the refusal of interlocutory relief.

Factual disputes

Some of the facts upon which I rely in this application were generally uncontested in the affidavit evidence. But many important facts were contested. In an interlocutory application of this nature, the court does not undertake a preliminary trial, nor does it give or withhold interlocutory relief upon a forecast as to the ultimate result of the case. It is not appropriate in this application to attempt to assess the merits of any disputed issue of fact.[1] Some of the disputed facts combine with factual matters on which no evidence was given to create uncertainty in relation to the important legal issue concerning whether the restraint of trade clause is enforceable. One possible consequence of this uncertainty is that the Court cannot be satisfied that there is a prima facie claim. Ultimately, and not without hesitation, after hearing oral submissions from Mr Holler, I have concluded that there is such a prima facie claim. But the uncertainties create real difficulty in assessing any strength of that claim as part of the balance of convenience.
[1] Kolback Securities Ltd v Epoch Mining NL (1987) 8 NSWLR 533, 535 - 536 (McLelland J); Australian Broadcasting Corporation v O'Neill [2006] HCA 46; (2006) 227 CLR 57, 84 [72] (Gummow & Hayne JJ).
Although I have relied upon some apparently uncontested facts, this is not an indication that they will be accepted at trial. The urgency of this application, the filing of affidavit material by Workplace as recently as last night, and Mr Mackie's position as a litigant in person who was required to produce affidavit evidence in a very short period of time might mean that some, even many, of the facts upon which I have relied might become disputed.

The business of Workplace

Workplace is a business specialising in the design, risk assessment, auditing, fabrication, construction and installation of equipment for working at heights.[2]
[2] Affidavit of Mr Sachs, sworn 20 February 2014, [4].
Workplace is owned and run by Mr Sachs whose affidavits are the foundation of this application.
Since May 2012, Workplace has had operations in Perth, Adelaide, Melbourne, Brisbane and Sydney.[3]
[3] Affidavit of Mr Sachs, sworn 20 February 2014, [5].
It appears that the Perth operation of Workplace is small. In Perth, Workplace has an office, a warehouse, a fabrication facility and an installation team which, at most of the relevant times consisted of only three people.[4] The categories of position at Workplace's business are as follows:[5]
(i)A Height Safety Supervisor/ Height Safety Inspector;
(ii)Warehouse Foreman/Fabricator;
(iii)Height Safety Consultant/Sales;
(iv)Height Safety Installers.
[4] Affidavit of Mr Sachs, sworn 27 February 2014, [5].
[5] Affidavit of Mr Sachs, sworn 20 February 2014, [5].

Mr Mackie's role at Workplace

On 5 March 2012, Mr Mackie was hired by Workplace as a contractor. His contract contained a restraint of trade clause.[6]
[6] Affidavit of Mr Sachs, sworn 27 February 2014, [3].
On 26 May 2012, Mr Mackie was hired by Workplace as a Height Safety Supervisor. Mr Mackie was employed under a written agreement dated 26 May 2012. The written agreement contained a clause restricting Mr Mackie’s use of confidential information.[7] It also contained a restraint of trade clause.[8] Both are considered in more detail below.
[7] Affidavit of Mr Sachs, sworn 20 February 2014, CS-1, 15 - 16.
[8] Affidavit of Mr Sachs, sworn 20 February 2014, CS-1, 18 - 20.
The terms of Mr Mackie's written agreement included a base salary of $70,000, the use of a company ute and a mobile phone.[9] Mr Mackie's written contract required him to perform the duties set out in his Position Description.[10] That Position Description was as follows:
[9] Affidavit of Mr Sachs, sworn 20 February 2014, [8].
[10] Affidavit of Mr Sachs, sworn 20 February 2014, CS-1, clause 2.1.
A.Height Safety Supervisor
B.Full Time
C.Position and duties:
(i)Assist in the installation & supervision of Roof Access Systems with WAS Contractors and or install works in full to completion.
(ii)Responsible for the estimating and ordering of materials for all projects.
(iii)Undertake on site Anchor Inspections / Certifications and produce Inspection Register, install roof access points and arrange Roof Layout Plan.
(iv)Where required, arrange delivery of materials to/from site.
(v)Responsible for supervising projects to achieve budget / time allocations.
(vi)Responsible for all site inductions and completion reporting.
(vii)Responsible to ensure compliance of WAS employees and contractors with OH&S legislation.
(viii)Assist WAS employees with all reasonable requests / instructions.
D.You shall be obliged to report to Richard Carrington (your Immediate Supervisor).
In November 2012, Mr Sachs gave Mr Mackie the task of establishing another brand associated with Workplace, called Keystone Access. The Keystone Access brand was to be developed predominantly within the commercial construction market. Mr Mackie was assisted in this task by the National Sales Manager for Keystone Access.[11]
[11] Affidavit of Mr Mackie, sworn 27 February 2014, [10].
In January 2013, Mr Mackie had an oral conversation with Mr Sachs in which Mr Mackie pointed to a number of obstacles and difficulties for both Workplace and Keystone Access in the commercial construction market.[12]
[12] Affidavit of Mr Mackie, sworn 27 February 2014, [11].
In February 2013, Mr Sachs orally told Mr Mackie to abandon any development strategies to establish the Workplace and Keystone Access brands in the commercial construction market.[13]
[13] Affidavit of Mr Mackie, sworn 27 February 2014, [13].
Also in February 2013, Mr Mackie had an oral conversation with Mr Sachs in which Mr Sachs offered Mr Mackie the position as Regional Manager for Workplace in Western Australia. Mr Mackie spoke to the two other employees of the Perth office[14] and then agreed. Mr Mackie was appointed to the role of Regional Manager for Western Australia.[15]
[14] Affidavit of Mr Mackie, sworn 27 February 2014, [14].
[15] Affidavit of Mr Sachs, sworn 27 February 2014, [9].
There is considerable dispute concerning Mr Mackie's duties as Regional Manager and the circumstances surrounding his promotion. It is, however, common ground that his salary increased from $70,000 to $86,000 and that he was given a larger car. The increase in salary was marginal after overtime is taken into account. Mr Sachs says that the nature of Mr Mackie's job remained the same.[16] This was orally disputed by Mr Mackie, and appears inconsistent also with Mr Mackie's affidavit evidence.[17]
[16] Affidavit of Mr Sachs, sworn 27 February 2014, [5].
[17] Affidavit of Mr Mackie, sworn 27 February 2014, [19].
It is also common ground that on 10 February 2013, Mr Mackie emailed to ask an employee '[w]ith regards to a new employment contract, will [Mr Sachs] present this to me when he comes to Perth?'[18]
[18] Affidavit of Mr Sachs, sworn 27 February 2014, CS-14.
In an affidavit in reply, Mr Sachs produced a memorandum, dated 5 March 2013, that he says he handed to Mr Mackie on 6 March 2013.[19] The Memorandum says:
Your additional responsibilities now include:-
-Managing sales
-Day to day running of Perth operations
-All other duties commensurate with the role
The rest of the terms of your employment remain unchanged.
[19] Affidavit of Mr Sachs, sworn 27 February 2014, [11] - [12], CS-15.

Mr Mackie leaves Workplace and begins work for Roofsafe

Mr Sachs claims that on or about 3 February 2014 he became aware that Mr Mackie had sent Workplace's confidential material to an external email address, believed to be Mr Mackie’s personal email account. Subsequent correspondence from Mr Mackie confirms that this is his email address. The confidential material included a client contact list, sales figures, audit report templates, and technical drawings.[20]
[20] Affidavit of Mr Sachs, sworn 20 February 2014, [31].
The emails also contained detailed drawings of Workplace's platforms.[21] Mr Sachs says, but Mr Mackie denies,[22] that these had not been provided to anyone except five senior managers across Australia. The drawings relate directly to six jobs which Workplace is competing with Roofsafe, ranging in value from $20,000 to $115,000.[23] Mr Sachs also says[24] that Mr Mackie was involved in all aspects of design and negotiation of these platforms. Mr Mackie, who had no opportunity to respond to this affidavit, denied this orally.
[21] Affidavit of Mr Sachs, sworn 20 February 2014, [32(b)].
[22] Affidavit of Mr Mackie, sworn 27 February 2014, [31].
[23] Affidavit of Mr Sachs, sworn 20 February 2014, [32(b)].
[24] Affidavit of Mr Sachs, sworn 27 February 2014, [20(a)].
Other documents in the emails included a list of 272 names and mobile phone numbers of contacts at a major client of Workplace,[25] a detailed manual containing 200 pages which included trade secrets and confidential information,[26] a report prepared for a client which Mr Sachs says (but Mr Mackie denies)[27] contains information about future rectification work,[28] a list of jobs which Mr Mackie forecast could be converted to orders and a PowerPoint presentation comparing Workplace's installations with those of Roofsafe.[29]
[25] Affidavit of Mr Sachs, sworn 20 February 2014, [32(c)].
[26] Affidavit of Mr Sachs, sworn 20 February 2014, [32(d)].
[27] Affidavit of Mr Mackie, sworn 27 February 2014, [34].
[28] Affidavit of Mr Sachs, sworn 20 February 2014, [32(e)].
[29] Affidavit of Mr Sachs, sworn 20 February 2014, [32(f)].
Mr Sachs also became aware from the emails that on 31 January 2014 Mr Mackie made a job application for a position as a Height Safety Sales Consultant to Roofsafe‑T‑Systems, which trades as Roofsafe Industrial Safety.[30]
[30] Affidavit of Mr Sachs, sworn 20 February 2014, [31].
On 4 February 2014, Mr Mackie’s employment with Workplace was terminated.[31]
[31] Affidavit of Mr Sachs, sworn 20 February 2014, [37].
On 12 February 2014, the CEO of Roofsafe confirmed to solicitors of Workplace that Roofsafe had hired Mr Mackie.[32]
[32] Affidavit of Mr Sachs, sworn 20 February 2014, [29].

The relevant principles for an interlocutory injunction

It is not necessary to set out the principles in relation to interlocutory injunctions in detail. They are generally set out by Beech J in Twinside Pty Ltd v Venetian Nominees Pty Ltd.[33] In broad summary they are as follows.
(1)The relevant considerations are:
(i)whether there is a serious question to be tried or prima facie case,
(ii)whether damages are adequate for the plaintiff, and
(iii)whether the balance of convenience favours the grant of the interlocutory injunction.
(2)The consideration of a prima facie case and the balance of convenience are not independent. As the apparent strength of the applicant's case diminishes, the balance of convenience moves against the making of an order.
(3)I also proceed on the basis that the consideration of adequacy of damages is not independent of the balance of convenience. As I explained in Mineralogy Pty Ltd v Sino Iron Pty Ltd (No 2)[34] a court will ask whether damages are an adequate remedy, but this question is not an essential precondition that an applicant must satisfy; instead, the adequacy of damages is treated as a matter relating to the balance of convenience.[35]
[33] Twinside Pty Ltd v Venetian Nominees Pty Ltd [2008] WASC 110 [7] - [11].
[34] Mineralogy Pty Ltd v Sino Iron Pty Ltd (No 2) [2013] WASC 375 [20].
[35] AB Hassle v Pharmacia (Australia) Pty Ltd (1995) 33 IPR 63, 76 - 77 (Ashley J); Marley New Zealand Ltd v Icon Plastics Pty Ltd [2007] FCA 851 [3] (Gordon J); Medrad Inc v Alpine Medical Pty Ltd [2009] FCA 949; (2009) 82 IPR 101, 109 [38] (Kenny J); Instyle Contract Textiles Pty Ltd v Good Environmental Choice Services Pty Ltd (No 2) [2010] FCA 38 [64] (Yates J); Samsung Electronics Co Ltd v Apple Inc [2011] FCAFC 156; (2011) 286 ALR 257, 276 [61] (the Court); Boyd v Wild Hibiscus Flower Company Pty Ltd(No 2) [2012] FCA 74 [64] (Foster J); Donoghue v Commissioner of Taxation [2013] FCA 84 [18] (Reeves J); Complete Field Maintenance Pty Ltd v Coulson [2013] WASC 374 [52] (Martin CJ).

A serious question to be tried

Mr Mackie's 26 May 2012 employment contract contained a restraint of trade clause which is considered in more detail below. This application is dependent upon a serious question to be tried that the restraint of trade clause is enforceable.

The restraint of trade clause

The focus of this application was upon the restraint of trade clause in Mr Mackie's 26 May 2012 employment set out below.
14.Restraint
14.1In this clause 'engage in' means to carry on, participate in, provide finance or services, or otherwise be directly or indirectly involved as a shareholder, unit holder, director, consultant, adviser, contractor, principal, agent, manager, employee, beneficiary, partner, associate, trustee or financier.
14.2The Employee will not:
(a)engage in any business or activity which is:
(i)the same or similar to our business or the Business;
(ii)the same or similar to any material part of our business or the Business; or
(iii)in competition directly or indirectly with our business or any material part of the Business.
(b)solicit, canvass, approach or accept any approach from any person who was at any time during the 24month period prior to the Termination Date a customer or client of the Company and with whom the Employee has personal dealings, with a view to obtaining the custom or involvement of that person in a Business;
(c)interfere with the relationship between the Company and its customers, employees or suppliers;
(d)employ or accept any approach for employment from any employee of the Company; or
(e)knowingly assist any person or corporation being a competitor of ours to carry on or develop any business which is the same as, similar to or in competition with the Business.
14.3The undertakings given in clause 14.2 will apply during the Employment, during any notice period or period in respect of which payment is made in lieu of notice (irrespective of the reasons for termination), and thereafter for a period of:
(a)36 months or if deemed unenforceable by a court of law;
(b)24 months; or if deemed unenforceable by a court of law;
(c)12 months; or if deemed unenforceable by a court of law;
(d)6 months; or if deemed unenforceable by a court of law;
(e)3 months.
14.4The undertakings given in clause 14.2 only apply if an activity prohibited under clause 14.2 occurs within:
(a)Australia, or if deemed unenforceable by a court of law;
(b)the state or territory of Australia in which the Employee performed the majority of work whilst employed by the Company.
14.5Clauses 14.2, 14.3 and 14.4 have effect together as if they consist of separate provisions, each resulting from combining each undertaking in clause 14.2 with each period in clause 14.2 and combining each of those combinations with each separate area in clause 14.4. If any of those separate provisions is invalid or otherwise unenforceable for any reason, the invalidity or unenforceability shall not affect the validity or enforceability of any of the other separate provisions or other combinations of those separate provisions.
14.6The Employee acknowledges that:
(a)all the prohibitions and restrictions contained in this clause are reasonable in the circumstances and necessary to protect the goodwill of the Company;
(b)damages may not be an adequate remedy if the Employee breaches any part of this clause; and
(c)the Company may apply for injunctive relief if:
(i)the Employee breaches or threatens to breach clause 14; or
(ii)it reasonably believes the Employee is likely to breach clause 14.

Did the restraint of trade clause terminate with Mr Mackie's promotion?

The primary issue raised by Mr Mackie is whether his 26 May 2012 employment agreement continued in force after February 2013 when Mr Mackie was appointed Regional Manager for Workplace.
The following is well settled:[36]
When the parties to an existing contract enter into a further contract by which they vary the original contract, then, by hypothesis, they have made two contracts. For one reason or another, it may be material to determine whether the effect of the second contract is to bring an end to the first contract and replace it with the second, or whether the effect is to leave the first contract standing, subject to the alteration. For example, something may turn upon the place, or the time, or the form, of the contract, and it may therefore be necessary to decide whether the original contract subsists.
[36] Concut Pty Ltd v Worrell [2000] HCA 64; (2000) 176 ALR 693, 698 [19] (Gleeson CJ, Gaudron & Gummow JJ); Commissioner of Taxation v Sara Lee Household & Body Care (Australia) Pty Ltd [2000] HCA 35; 172 ALR 346 at 350 - 351 [22] (Gleeson CJ, Gaudron, McHugh & Hayne JJ).
An application of these principles can be seen in Quinn v Jack Chia (Australia) Ltd.[37] In that case, Mr Quinn was employed by the defendant company as an assistant to the construction manager of a particular project. His written contract of employment provided for dismissal with one month's notice. Seven months later, in August 1985, Mr Quinn was promoted to the position of construction manager and general manager‑construction for the defendant company. He was also appointed to the board of two companies in the same group as the defendant. He undertook duties for the defendant company which were not related to the particular project on which he was initially engaged. The defendant company sought to dismiss him with one month's notice, relying on the terms of the original contract. In the Supreme Court of Victoria, Ashley J (as his Honour was then) held that the new contract of employment, which was formed orally and by conduct when Mr Quinn was promoted, had terminated the previous written contract. The changes to Mr Quinn's employment in August 1985 were of great magnitude and involved more than a variation of the previous written contract. The same notice period was not incorporated into the new contract. The reasonable notice implied into the new contract was 12 months.
[37] Quinn v Jack Chia (Australia) Ltd [1992] 1 VR 567.
Ashley J referred to the decision of the Chief Justice in Federated Mutual Insurance Co of Australia Ltd v Sabine[38] where the issue concerned the dismissal, on one month's notice of an employee of the insurance company. The notice period was contained in the employee's contract as assistant state manager. But the employee had been promoted to the position of state manager prior to dismissal. The Chief Justice held that the period of notice did not apply to the new contract of employment. Ashley J described this case as an example of a circumstance where, as in Quinn, a profound alteration in the employees' duties and responsibilities means that[39]
a court should be more ready to hold (unless the original contract of employment provided for the contingency) that a new contract has replaced the old; or at least that the old contract, as varied, contained terms objectively appropriate to the new relationship created.
[38] Federated Mutual Insurance Co of Australia Ltd v Sabine [1920] SALR 284, 292.
[39] Quinn v Jack Chia (Australia) Ltd [1992] 1 VR 567, 576.
A contrasting example is the decision of the High Court of Australia in Concut Pty Ltd v Worrell.[40] In that case, Mr Wells was employed by Concut from 1980 under an oral agreement. In 1986, Mr Wells entered a written 'Service Agreement' with Concut which included a recital that the parties 'have entered into this Agreement to record the terms and conditions of the employees [sic] employment with [Concut]'. The High Court held that the Service Agreement did not have the effect of terminating and replacing the anterior oral agreement between Concut and Worrell.
[40] Concut Pty Ltd v Worrell [2000] HCA 64; (2000) 103 IR 160.
As the contrasting cases illustrate, it is a heavily fact dependent question whether a second contract, such as that involved with Mr Mackie's promotion, operates to bring an end to the first contract and replace it with the second, or to leave the first contract standing, subject to the alteration. Different minds regularly differ in the conclusion reached. For instance, a majority of the Court of Appeal in Queensland had reached a different conclusion from that of the High Court in Concut.
More recently, the Full Court of the Federal Court of Australia reached a different conclusion from the trial judge on the same question of whether successive agreements were self‑contained, discrete contracts.[41]
[41] Cohen v iSOFT Group Pty Ltd [2013] FCAFC 49; (2013) 218 ALR 516, 527 [39] - [47] (the Court).
It is neither necessary, nor possible to attempt to resolve this question at this interlocutory stage. Much will depend upon a close analysis of all the circumstances surrounding Mr Mackie's promotion to Regional Manager, including the extent to which his responsibilities had departed from his written contract by then. But it suffices for this interlocutory application to say that the 5 March 2013 Memorandum is a significant indicator that the additional duties and rights with Mr Mackie's promotion to Regional Manager were objectively intended as a variation to his contract rather than as embodying a new contract.
Nevertheless, there remain questions raised by the Memorandum.
One question is which terms of employment does the final sentence of the Memorandum relate to on its objective construction? Workplace says that it relates to Mr Mackie's 26 May 2012 written agreement. But Mr Mackie's evidence is that the terms of his employment had changed substantially by November 2012. In contrast, it appears from Mr Sachs' evidence that Mr Mackie's duties in February 2013, before his promotion, involved additional responsibilities but a job of the same nature (which Mr Holler submitted meant the same nature as the Position Description at 26 May 2012.)[42]
[42] Affidavit of Mr Sachs, sworn 27 February 2014, [5].
It is possible that the duties Mr Mackie was performing from November 2012 were no longer referable to his 26 May 2012 written contract. Of course, that question is itself highly fact dependent, and it will also require consideration of cl 3.1(a) of the 26 May 2012 agreement which provides for Mr Mackie's duties to be those in the Position Description 'or as may from time to time be assigned or delegated by us...' and cl 4.4 which concerns changes to remuneration.[43] It will also be necessary to consider Mr Mackie's response to the Memorandum. The Memorandum was an annexure to Mr Sachs' affidavit in reply, filed last night before this hearing.

Principles concerning enforceability of the restraint of trade clause

[43] See Cameron v Asciano Services Pty Ltd [2011] VSC 36 [51] - [54] (Beach J).

It is not necessary to set out in detail the principles concerning the enforceability of restraint of trade clauses. I discussed those matters in Emeco International Pty Ltd v O'Shea (No 2).[44] In broad summary, they are as follows.
(1)As Lord Macnaghten said in Nordenfelt v The Maxim Nordenfelt Guns and Ammunition Co Ltd:[45]
[I]t 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.
(2)The onus of proof is on Workplace to show that the restraint of trade clause in the employment agreement is reasonable as between the parties.[46]
(3)The question of reasonableness is determined at the date of the contract, although subsequent developments can be considered to determine whether the agreement was reasonable to make at the date of contract, having in mind the best estimate that the parties could make for the future.[47]
(4)A restraint is reasonable in relation to the restraining party if it is necessary for the adequate protection of a legitimate interest of that party and reasonable in relation to the party restrained if it preserves the fullest liberty of action consistent with that protection.[48]
(5)The legitimate interests about which a restraint is commonly justified is customer connection and confidential information. A restraint may be justified as protecting more than one legitimate interest.[49]

Did the restraint of trade clause reasonably protect a legitimate interest?

[44] Emeco International Pty Ltd v O'Shea (No 2) [2012] WASC 348 [84] - [95].

[45] Nordenfelt v The Maxim Nordenfelt Guns and Ammunition Co Ltd [1894] AC 535, 565.See Smith v Nomad Modular Building Pty Ltd [2007] WASCA 169 [6] (McLure JA; Buss JA agreeing).

[46] Wellard Rural Exports Pty Ltd v Robinson III [2013] WASC 89 [11] (Allanson J).

[47] Smith v Nomad Modular Building Pty Ltd [2007] WASCA 169 [7] (McLure JA; Buss JA agreeing); Amoco Australia Pty Ltd v Rocca Bros Motor Engineering Co Pty Ltd [1973] HCA 40; (1973) 133 CLR 288, 318 (Walsh J); Putsman v Taylor [1927] 1 KB 637, 643 (Salter J).

[48] Smith v Nomad Modular Building Pty Ltd [2007] WASCA 169 [8] (McLure JA; Buss JA agreeing); Brightman v Lamson Paragon Ltd [1914] HCA 90; (1914) 18 CLR 331, 337 (Isaacs J); Buckley v Tutty [1971] HCA 71; (1971) 125 CLR 353, 376 (the Court).

[49] Jardin v Metcash Ltd [2011] NSWCA 409; (2011) 285 ALR 677, 695 [91] (Meagher JA, Campbell & Young JJA agreeing).

I received very limited evidence concerning whether Workplace had a prima facie case that it had discharged its onus of showing that the restraint of trade clause was necessary for the adequate protection of a legitimate interest of Workplace and reasonable in relation to Mr Mackie. Mr Holler understandably relied heavily on the terms of the 26 May 2012 contract itself. But the terms of a contract will rarely be sufficient, on their own, to establish a legitimate interest or to delineate the boundaries of reasonable protection.
There are several matters of note.
First of all, as I have explained, the enforceability of the restraint of trade clause falls to be assessed at the time of the contract on 26 May 2012. It was not submitted that an unenforceable restraint of trade clause might somehow have revived if the 26 May 2012 contract was amended with Mr Mackie's promotion.
Assessed in light of Mr Mackie's position description on 26 May 2012, there does not appear to be demonstrate a close client connection. There was no evidence about the expectations of Workplace on 26 May 2012 concerning Mr Mackie's future client connections in his position.
In Mr Mackie's affidavit he also disputes that he managed sales in the relevant period and he disputes that he was involved in reviewing client lists.[50] He says that he did have access to Workplace's invoicing and purchase order systems (along with most other employees), construction and sales meeting minutes, pricing of two projects (subsequently amended by Mr Sachs), and he says he had control over the supervision and management of contractors.[51] But Mr Mackie does not link these various matters to a particular time nor does his evidence reveal whether these roles could have been reasonably expected of his position at the time of his written employment contract.
[50] Affidavit of Mr Mackie, sworn 27 February 2014, [39].
[51] Affidavit of Mr Mackie, sworn 27 February 2014, [39].
Mr Holler's submissions concerning legitimate interest were therefore heavily focused upon confidential information in the absence of significant evidence of client connection at the time of contracting.
Secondly, to the extent to which the restraint of trade clause is designed to protect a legitimate interest in confidential information, the contract also contains a substantial confidentiality clause. That clause is annexed as appendix 1 to these reasons. Once again, the need for protection of a legitimate interest in confidentiality needs to be assessed in light of Mr Mackie's Position Description on 26 May 2012 and the likely confidential information to which he would be exposed. The evidence on this point was also insubstantial. I do not accept Mr Holler's submission that it is sufficient merely to have regard to the presence of a detailed contractual provision which protects 'any' confidential information as the basis for a firm inference about the substance and nature of confidential information to which Mr Mackie would be exposed.
On the other hand, I do accept, as I explained in Emeco International Pty Ltd v O'Shea (No 2),[52] that it is not necessary to identify precisely the confidential information about which, at the date of contract, Workplace could reasonably have expected Mr Mackie would be exposed. Nor is it necessary for a precise line to be drawn between confidential and non‑confidential information. The difficulty in drawing such a line might, itself, sometimes be a justification for a reasonable restraint of trade clause.
[52] Emeco International Pty Ltd v O'Shea (No 2) [2012] WASC 348 [98] - [108].
Thirdly, considered in light of Mr Mackie's Position Description, his salary, and his background which was heavily based in the roofing industry, some aspects of the restraint of trade clause might arguably go further than is necessary to protect any interest of Workplace in confidentiality or customer connection. For instance, could it be said that Workplace's interests in protecting its customers and confidential information, based upon Mr Mackie's exposure to them required him to be restrained for three years across the whole of Australia in the broad terms expressed in the restraint?
Fourthly, if parts of the restraint of trade clause are unenforceable then could they be severed, as the clause contemplates?
There is a 'strictly circumscribed role for severance in the context of employee restraint covenants'.[53] Courts should exercise caution before severing a clause because the effect of doing so is for the court to come to the assistance of an employer when 'the real sanction at the back of these covenants is the terror and expense of litigation, in which the servant is usually at a great disadvantage, in view of the longer purse of his master.'[54] Nevertheless, severance does occur and it is possible, by a carefully constructed cascading clause, such as in this case, for the parties to avoid some of the well‑known objections to severance.[55]
[53] I F Asia Pacific Pty Ltd v Galbally [2003] VSC 192; (2003) 59 IPR 43, 74 [174] (Dodds‑Streeton J).
[54] Mason v Provident Clothing & Supply Co Ltd[1913] AC 724, 745 (Lord Moulton); Attwood v Lamont [1920] 3 KB 571, 594 (Younger LJ); BDO Group Investments (NSW-VIC) Pty Ltd v Ngo [2010] VSC 206 [41] (Croft J).
[55] But cf J D Heydon, The Restraint of Trade Doctrine (3rd ed, 2008) 291.
Fifthly, as Mr Holler accepted to be the case, a clause cannot recite itself into validity by an acknowledgement by an employee (here, Mr Mackie) that it is reasonable.
In light of these five matters, and on the very limited evidence and argument before me on these points, there are real and substantial questions concerning the extent and enforceability of the restraint of trade clause in Mr Mackie's 26 May 2012 contract. Although the matter before me is finely balanced on the very limited material I have on the relevant points, I conclude, not without real hesitation, that Workplace has a prima facie case, or serious question to be tried, that the restraint of trade clause is enforceable in some form.

The balance of convenience and adequacy of damages

As I have explained, the serious question to be tried must be assessed against the injustice that Mr Mackie may suffer if the injunction is granted and Workplace later fails in its claim for final relief.
This assessment is not independent of a consideration of the strength of Workplace's case. Although the matter will be heavily fact dependent, I take into account that there appears to be some force in Workplace's prima facie case for enforcement of the contractual restraints against Mr Mackie, based on the 5 March 2013 Memorandum to which I have referred. But there are real questions concerning the scope of the restraint of trade clause, its reasonableness, and, if it is unreasonable, the extent to which severance is possible.
There are, however, a number of factors favouring Workplace in the balance of convenience.
First, I accept that damages would not be a wholly adequate remedy for Workplace. It is commonly said that in restraint of trade cases, it 'is a rare case in which relief will be declined on the basis that damages are a sufficient remedy'.[56]
[56] Cerilian Pty Ltd v Fraser [2008] NSWSC 1016 [10] (Brereton J); Willis Australia Group Services Pty Ltd v Griggs [2012] NSWSC 659; (2012) 222 IR 172, 201 [129] - [130] (Ward J); see also John Fairfax Publications Pty Ltd v Birt [2006] NSWSC 995 [45] (Brereton J).
Workplace claims that the balance of convenience favours the granting of the injunction as not to do so will deprive Workplace, probably permanently, of the benefit of potentially valid contractual restraints to protect its confidential information. This is not entirely accurate. Workplace has a separate confidentiality clause. The concern is that, without restraint, Mr Mackie will breach that clause without Workplace's knowledge.
Mr Holler referred to Mr Mackie's employment with Workplace's competitor, Roofsafe, and described its confidential information as including platform drawings and its application for an innovation patent for those platforms. He also referred to Mr Mackie's protestations on 17 February 2014 that he did not have any of Workplace's material. In contrast with these protestations, on 24 February 2014, Mr Mackie delivered up a bag of documents belonging to Workplace.[57]
[57] Affidavit of Mr Sachs, sworn 27 February 2014, [14]; Affidavit of Mr Sachs, sworn 20 February 2014, page 87.
The reasons why damages are often inadequate in cases involving breach of a restraint of trade clause includes:
(i)the difficulty of detection of breaches of the obligations;
(ii)the difficulty of establishing causation between any loss of business with customers and any actions of the ex‑employee; and
(iii)the difficulty of the calculation of the quantum of any damage arising from loss of business.[58]
[58] Huhtamaki Australia Ltd v Botha[2004] NSWSC 386 [17] (Hamilton J).
Although these concerns are substantial, they should not be overstated in this case. The evidence before the Court gives rise to the potential for numerous possible breaches of confidentiality in relation to all the documents which Mr Mackie is alleged to have sent from his personal email address. If any client is lost by Workplace to Roofsafe then it is possible that inferences might be drawn against Mr Mackie. As I have explained, Workplace may have the direct protection of its confidentiality clause set out in appendix 1 to these reasons. Further, losses are often assessed in terms of a loss of a chance.
I also accept that Workplace has concerns arising from Mr Mackie's active involvement in preparing sales quotations, negotiating with clients and calling on clients.[59] There is some evidence of substantial contact with one major client.[60] However, two points must be reiterated. One is that mere involvement with customers does not establish the relevant customer connection for a legitimate interest requiring the protection of a restraint of trade clause. The other is that the relevant customer connection, or expected customer connection, must be established as at the date of the employment contract not the date of trial.
[59] Affidavit of Mr Sachs, sworn 27 February 2014, [30].
[60] Affidavit of Mr Sachs, sworn 27 February 2014, [22].

Secondly, another relevant matter for the balance of convenience relied upon by Mr Holler is that an employee who, in defiance of a restraint of trade clause, accepts employment with a competitor runs a risk of enforcement of the restraint.[61]
[61] John Fairfax Publications Pty Ltd v Birt [2006] NSWSC 995 [49] (Brereton J).
The force of this matter is ameliorated in this case by Mr Mackie's belief, which for the purposes of this application I take to be genuine, that he was not
held to an employment agreement as a Height Safety Supervisor, with duties that do not apply to the role and duties of regional manager which was the position I held when I was dismissed.[62]
[62] Affidavit of Mr Mackie, sworn 27 February 2014, [55].
Against these matters are factors in the balance of convenience which favour Mr Mackie. They are as follows.
First, in his affidavit, Mr Mackie has sworn that:[63]
(i)he has not used or taken any confidential information from Workplace for personal or commercial gain or for the benefit of Roofsafe;
(ii)he has not contacted or solicited work, or provided services to clients of Workplace and does not intend to do so; and
(iii)he has not reproduced, communicated or produced any materials in which Workplace has copyright to any client of Workplace or to Roofsafe. He does not intend to do so.
[63] Affidavit of Mr Mackie, sworn 27 February 2014, [41].
At the oral hearing of this application Mr Mackie indicated that he was prepared to give a formal undertaking to the Court about these matters.
That undertaking is appropriate. The effect of the undertaking would remove a substantial part of the sting of Mr Mackie's employment with Roofsafe. Mr Mackie's compliance with the formal undertaking would mean that he would have, and could have, no contact with any of the clients referred to by Mr Sachs in his 27 February 2014 affidavit.
I have also considered Mr Mackie's argument that Workplace and Roofsafe rarely compete for work because Roofsafe deals with construction companies, which Workplace has chosen to avoid.[64] There appears to be dispute on this issue, although the extent of the dispute is difficult to assess because Workplace has not provided precise evidence about the content of Roofsafe's business. Workplace merely asserts that the companies are direct competitors, competing for the same clients in the same industry.[65] I proceed on the basis that there is real rivalry between the two companies and potential for Roofsafe to compete for clients. But the extent of that rivalry is another factual matter that is not possible to assess in this application.
[64] Affidavit of Mr Mackie, sworn 27 February 2014, [50].
[65] See affidavit of Mr Sachs, sworn 27 February 2014, [16].
Secondly, the grant of an interlocutory injunction would have a serious effect on Mr Mackie's ability to work.
Mr Holler pointed to Mr Mackie's qualification as a roof plumber. But it is not possible to ignore Mr Mackie's choice to leave that occupation due to his belief that it involved 'poor occupational health and safety policies and procedures and an unacceptable drug culture'.[66] Nor can the Court ignore the financial insecurity that Mr Mackie says would result from working as a roof plumber because he would be required to work as a sub‑contractor.[67] The height safety industry is Mr Mackie's chosen profession.
[66] Affidavit of Mr Mackie, sworn 27 February 2014, [4].
[67] Affidavit of Mr Mackie, sworn 27 February 2014, [49].
Apart from his qualification as a roof plumber, and periods spent by Mr Mackie as a professional sportsman and a wall cladder (prior to 2005), Mr Mackie has spent the last decade working in the roofing industry.[68] Although I accept the evidence of Mr Sachs that there are numerous jobs advertised in Perth in areas of sales, site supervisors, and external cladding, it is nevertheless relevant that Mr Mackie's experience as a salesman, contractor, and supervisor is all within the roofing industry and the evidence was extremely limited concerning the extent to which he could work for roofing companies without allegations of indirect competition between those companies and Workplace.
[68] See affidavit of Mr Sachs, sworn 27 February 2014, CS-19.
Thirdly, Mr Mackie has explained that he has an immediate need for income.[69] He has separated from his partner. He pays child support, rent, household bills, and childcare costs. His lease of his home has not been renewed by his landlord. He has no family support in Perth. Although Workplace has given an undertaking to pay compensation to Mr Mackie if an injunction is granted and the restraint is found to be unenforceable, this undertaking does not provide the immediate income of which Mr Mackie will be deprived. Although Mr Mackie has not subsequently investigated alternative employment, the fact of the matter is that he had already accepted employment with Roofsafe before it was reasonably clear to him that he should not do so. I do not accept Mr Holler's submission that a reasonable alternative would be for Mr Mackie to resign now from Roofsafe and return to New Zealand.
[69] Affidavit of Mr Mackie, sworn 27 February 2014, [47] - [49].
It is also pertinent to reiterate that this is not the standard case where an employee, aware of a restraint of trade clause, chooses to go to work for a competitor and runs the obvious risk of proceedings for an injunction. In such cases, claims of financial hardship must be assessed in light of the obvious risk run by the employee. The circumstance of the changing nature of Mr Mackie's employment, and its contractual effect, gives rise to a legal issue, the application of which to the facts has divided many courts. It could not reasonably be expected that Mr Mackie was running an obvious risk when he applied to Roofsafe, and accepted employment with it.

Conclusion

It is clear that the relationship between Mr Mackie and Workplace has irreparably broken down. Apart from these proceedings, Mr Mackie has proceedings against Workplace for unfair dismissal.
In the context of this breakdown of relations, the removal of confidential information to a personal email address is one of the most serious sources of concern in this application. It is not possible to adjudicate finally upon this issue in the absence of full evidence. This hearing can only proceed on the basis of Mr Mackie's evidence, which was not the subject of cross-examination, that he is not in possession now of any of the other documents described by Mr Sachs. Mr Mackie also says that he has deleted all the emails described by Mr Sachs as having been sent to Mr Mackie's personal email account.[70]
[70] Affidavit of Mr Mackie, sworn 27 February 2014, [31] - [37].
In circumstances in which Mr Mackie is a litigant in person who had only two days to prepare his affidavit, Workplace has, quite properly, included in its affidavit materials the response of Mr Mackie to the allegations that he removed confidential information. That response is that Mr Mackie downloaded the information, and emailed it to his Hotmail account so that he could access it from home, where he often works.[71] Workplace has raised real concerns about this answer which must also be considered in light of the timing of Mr Mackie's emails and their proximity to his job application to Roofsafe.[72]
[71] Affidavit of Mr Sachs, sworn 27 February 2014, [17].
[72] Affidavit of Mr Sachs, sworn 27 February 2014, [17] - [19].
On the other hand, Workplace has the benefit of a substantial confidentiality clause in Mr Mackie's 26 May 2012 employment contract, which Workplace says persists into Mr Mackie's contract at the date of termination. Workplace also has the benefit of the equitable law of confidence which binds both Mr Mackie and Roofsafe, and a formal undertaking which will be made by Mr Mackie.
Ultimately, in all the circumstances, the balance of convenience does not favour the grant of an interlocutory injunction.
I will hear from counsel for Workplace and Mr Mackie in relation to costs. It may be that the usual order for costs in interlocutory proceedings of this nature is appropriate. That is, that costs be in the cause of the ultimate hearing in circumstances in which the interim adjudication of rights in the interlocutory proceedings is based on necessarily incomplete information. There will also be a directions hearing for this matter listed for next Wednesday, 5 March 2014, at 9:15 am following the mediation at 2:00 pm the previous day.

Appendix 1: The confidentiality clause

1.3Confidential Information includes private affairs, finances, transactions or other dealings of ours, policies, trade secrets, know‑how, technology, any data relating to marketing, project planning, the names and addresses and contact details of any customers of ours, plans, designs, costings, research, developments, inventions, trade secrets, samples, manufacturing processes, Intellectual Property, commercial knowledge, human resources information, marketing or sales information, suppliers, agents and any other materials considered to be of competitive advantage by us (including, but not limited to, heads of agreements and confidentiality agreements).
6.Confidential Information
6.1During the Agreement or at any time thereafter, you undertake, other than with our prior written consent, not to:
(a)disclose to any person any of the Confidential Information;
(b)use or attempt to use any such Confidential Information in any manner which may injure or cause loss either directly or indirectly to us or our Business or which may be likely to do so; or
(c)copy or reproduce in any form, or on or by any media or device allow others access to or to copy or reproduce recorded information whether or not in documentary or electronic form containing or referring to the Confidential Information.

6.2The restrictions in clause 6.1 will not:
(a)restrict you from disclosing any Confidential Information which must be disclosed by law provided that you shall, unless otherwise required by law, give as much prior written notice as is possible to us of the requirement; and
(b)apply to Confidential Information which is or which comes into the public domain other than as a result of an unauthorised disclosure by you or any other person bound to us by an obligation of confidentiality.

6.3Where the Confidential Information is stored electronically, you must comply with any request from us for the Confidential Information to be deleted or erased in such a manner that it cannot be retrieved on termination, resignation or cessation of your employment.
6.4You agree that the restrictions set out in this Clause 6 are without prejudice to any other duties of confidentiality owed to us or whether express or implied and shall continue to be in force indefinitely after the cessation of the Agreement.
6.5Notwithstanding any other matter contained in the Agreement you acknowledge that any and all email communications of whatever nature (including any attachments) received by you and whether of a private or work related nature at any email address supplied by us shall at all times be our property and capable of being accessed by us.