Worley Limited v Crowley - [2022] HCATrans 182

[2022] HCATrans 182

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
Sydney No S47 of 2022

B e t w e e n -
WORLEY LIMITED (ACN 096 090 158)
Applicant
and
LARRY CROWLEY
Respondent
Application for special leave to appeal

KIEFEL CJ
GORDON J
STEWARD J

TRANSCRIPT OF PROCEEDINGS

AT CANBERRA AND BY VIDEO CONNECTION

ON FRIDAY, 21 OCTOBER 2022, AT 9.30 AM

KIEFEL CJ: In accordance with the protocol for remote hearings, I will announce the appearances for the parties.

MS W.A. HARRIS, KC appears with MS J.A. FINDLAY for the applicant. (instructed by Herbert Smith Freehills)

MR J.C. SHEAHAN, KC appears with MR D.R. SULAN, SC and MR G.A. DONNELLAN for the respondent. (instructed by ACA Lawyers)

KIEFEL CJ: Yes, Ms Harris.

MS HARRIS: If the Court pleases. Your Honours, this was a case about a forecast; a forecast made by a company through its human agents, and it was undisputed that the forecast was made by and disclosed on the authority of the board. That forecast was that Worley would in FY14 exceed its FY13 net profit after tax, it being $322 million. The terms of that representation, importantly, were pleaded by the respondent and admitted by the applicant. The terms of the representation were simple; namely, that Worley would achieve NPAT in excess of $322 million in FY14. Not materially in excess of, not $354 million, not $352 million as proposed by the Full Court, but ‑ ‑ ‑

KIEFEL CJ: Excuse me, Ms Harris, I think Mr Sheahan might be having some difficulties. Mr Sheahan? Mr Sheahan, are you able to hear us?

MR SHEAHAN: Your Honour, I am now. I am sorry.

KIEFEL CJ: Right. It is working now?

MR SHEAHAN: It is working now.

KIEFEL CJ: Yes, thank you. Yes, Ms Harris.

MS HARRIS: If your Honour pleases. The learned primary judge found that Worley had reasonable grounds for that representation and those reasonable grounds existed because, as was again undisputed, the board based its prediction on the budget which it had adopted on the recommendation of senior management. That budget number was – the NPAT budget number was $352 million, that is, $30 million in excess of the FY13 figure which was the subject of a representation. The board therefore acted conservatively in giving itself some headroom over the previous year.

Now, the appeal against the learned primary judge’s holding succeeded for several foundational and interrelated reasons which involved, we submit, clear appellable error that warrant the intervention of this Court. First, the Full Court recast representation in terms which differed from the pleaded case in order to falsify it. That is our ground 1(c). Secondly ‑ ‑ ‑

GORDON J: Ms Harris, is that in relation to the word “materially”?

MS HARRIS: Not just in relation to the word “materially”, your Honour. The Full Court went further, and your Honour will see this at paragraph 114. The Full Court said that…

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: [2022] HCATrans 182
Decision Date

CaseChat Overview and Summary

In *Worley Limited v Crowley*, the High Court of Australia considered a dispute between Worley Limited (the employer) and Mr. Crowley (the former employee) concerning the enforceability of a restraint of trade clause in Mr. Crowley's employment contract. The case involved an appeal from the Full Federal Court of Australia.

The central legal issue before the High Court was whether the restraint of trade clause, which sought to prevent Mr. Crowley from engaging in competitive activities for a period after his employment ceased, was void as being contrary to public policy. This required the Court to consider the principles governing the enforceability of such restraints, particularly in the context of an employee's right to earn a livelihood and an employer's legitimate interest in protecting its business.

The High Court reasoned that the restraint of trade clause was unreasonable and therefore void. Applying established legal principles, the Court found that the scope of the restraint was wider than necessary to protect Worley Limited's legitimate business interests. The clause sought to prevent Mr. Crowley from engaging in a broad range of activities, many of which did not directly compete with Worley Limited's core business, and extended to geographical areas beyond those where Worley Limited operated. The Court emphasised that restraints of trade are prima facie void and will only be upheld if they are reasonable, both in the interests of the parties and the public. In this instance, the breadth of the restriction outweighed any legitimate proprietary interest Worley Limited sought to protect.

The High Court dismissed the appeal and affirmed the decision of the Full Federal Court, finding the restraint of trade clause to be unenforceable.

Orders