Australian Insurance Holdings Pty Ltd v Chan

(b) Any information within the meaning of the expression "Confidential Information" as that term is defined in item 1.1 of Schedule 2 of an Employment Contract between the Applicant and the Respondent dated 1 December 2008.

1. The application for interlocutory relief contained within the applicant's application filed 14 July 2010 is adjourned generally.

2. The respondent is restrained until the trial of the proceeding or further earlier order from performing work for Suncorp‑Metway Limited or any "Associated Entity" as that term is understood for the purposes of the Corporations Act 2001 (Cth) of Suncorp‑Metway Limited that is or involves the analysis of, reporting on or review of information about insurance policies, insured persons or entities, insurance premiums, insurance claims, actuarial services, underwriting, or insurance product pricing in the motor vehicle insurance and/or home insurance market.
3. The parties have liberty to apply on one day's notice.
4. The respondent shall provide a copy of this order to Mr Stephen Jeffries, Mr James Fitzpatrick and Ms Natasha Fenech being the individuals mentioned and referred to by Mr Chan in his affidavit sworn 20 July 2010.
5. The costs of and incidental to the interlocutory application are reserved.
6. The applicant shall file and serve a statement of claim in the proceeding within seven days.
7. The respondent shall file and serve a defence within a further seven days.
8. The applicant shall file and serve a reply within a further three days.
9. The applicant shall provide discovery within a further five days.
10. The respondent shall provide discovery (if any) within a further three days.
11. The applicant shall file and serve any further affidavits upon which it proposes to rely within a further five days.
12. The respondent shall file and serve any further affidavits upon which it proposes to rely within a further five days.
13. The application will be listed for review on 30 August 2010.

Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. The text of entered orders can be located using Federal Law Search on the Court's website.

Background 1 By this application the applicant in the principal proceeding, Australian Insurance Holdings Pty Ltd ("AIH") seeks the following interlocutory orders: 1. until the trial of this matter or further or earlier order, the respondent, by himself, his servants or agents be restrained from and an injunction be granted restraining the respondent from disclosing, divulging or making use of in any way: (a) any information relating to or contained in the current pricing model or models used by the applicant for the pricing of insurance policies and the information relating to or contained in the pricing model known as the "Component Pricing Model" as developed by the applicant; and /or (b) any information within the meaning of that expression "Confidential Information" as that term is defined in item 1.1 of Schedule 2 of the Employment Contract between [AIH] and James Chan dated 1 December 2008; 2. until the trial of this matter or further earlier order, the [r]espondent, by himself, his servants or his agents be restrained from and an injunction be granted restraining the respondent from performing work for: (a) Suncorp; or (b) any other person or entity involved in the analysis of, reporting on or review of information about insurance policies, insured persons or entities, insurance premiums, insurance claims, actuarial services, underwriting and/or insurance product pricing in the motor vehicle insurance and/or home insurance market. 2 The above interlocutory orders are sought pending trial in aid of the final relief AIH seeks in the action which is framed in these terms: 1. Pursuant to s 1324 of the Corporations Act or otherwise, the respondent, by himself, his servants or agents be restrained and an injunction be granted restraining the respondent from disclosing, divulging or making use of in any way: (a) any confidential information in breach of s 183 of the Corporations Act; (b) any confidential information acquired by the respondent during the course of his employment by the applicant; and/or (c) the information relating to or contained in the current pricing model or models used by the applicant for the pricing of insurance policies and the information relating to or contained in the rating model known as the Component Rating Model being developed by the applicant; 2. Pursuant to s 1324 of the Corporations Act or otherwise, the [r]espondent by himself, his servants or his agents be restrained from and an injunction be granted restraining the respondent from performing any work for: (a) Suncorp; or (b) any other person or entity involved in the analysis of, reporting on or review of information about insurance policies, insured persons or entities, insurance premiums, insurance claims, actuarial services, underwriting and/or insurance product pricing in the motor vehicle insurance and/or home insurance market. 3 By the present application AIH seeks to restrain Mr Chan from using or divulging or threatening to use or divulge AIH's confidential information which he is said to have obtained whilst employed by AIH. The applicant also seeks to restrain Mr Chan from breaching obligations contained in his employment contract which prohibit him from taking up employment with Suncorp or other competitors of AIH according to a particular formulation of the restraint. As to the confidentiality issues, the causes of action relied upon by AIH are a contended contravention of s 183 of the Corporations Act 2001 (Cth); a threatened breach of fiduciary duty; a threatened contravention of Mr Chan's obligation at law to maintain the confidentiality of AIH's information; and threatened breaches of the "Confidential Information" clauses of Mr Chan's Employment Contract. Section 183 of the Corporations Act provides that a person who obtains information because that person is an employee of a corporation, must not improperly use the information to either gain an advantage for himself or herself or someone else; or cause detriment to the corporation. Section 1324 is a remedial provision concerning the power to grant an injunction where a person has engaged, is engaging or is proposing to engage in conduct that constituted, constitutes or would constitute a contravention of the Act. 4 The organising principles governing the grant of interlocutory relief are explained by Gummow and Hayne JJ in Australian Broadcasting Corporation v O'Neill (2006) 227 CLR 57 at [65] to [72], in part, in the following terms: 65. The relevant principles in Australia are those explained in Beecham Group Ltd v Bristol Laboratories Pty Ltd (1968) 118 CLR 618. This Court (Kitto, Taylor, Menzies and Owen JJ) said that on such applications the Court addresses itself to two main inquiries and continued [at 622‑623]: "The first is whether the plaintiff has made out a prima facie case, in the sense that if the evidence remains as it is there is a probability that at the trial of the action the plaintiff will be held entitled to relief … The second inquiry is … whether the inconvenience or injury which the plaintiff would be likely to suffer if an application were refused outweighs or is outweighed by the injury which the defendant would suffer if an injunction were granted." By using the phrase "prima facie case", their Honours did not mean that the plaintiff must show that it is more probable than not that at trial the plaintiff will succeed; it is sufficient that the plaintiff show a sufficient likelihood of success to justify in the circumstances the preservation of the status quo pending the trial. That this was the sense in which the Court was referring to the notion of a prima facie case is apparent from an observation to that effect made by Kitto J in the course of argument [citation]. With reference to the first inquiry, the Court continued, in a statement of central importance for this appeal [citation]: "How strong the probability needs to be depends, no doubt, upon the nature of the rights [the plaintiff] asserts and the practical consequences likely to flow from the order he seeks." … 68. Lord Diplock in [American Cyanamid Co. v Ethicon Ltd [1975] AC 396] was at pains to dispel the notion … that to establish a prima facie case of infringement it was necessary for the plaintiff to demonstrate more than a 50% chance of ultimate success. Thus Lord Diplock remarked [citation]: "The purpose sought to be achieved by giving to the court discretion to grant such injunctions would be stultified if the discretion were clogged by a technical rule for bidding its exercise if upon that incomplete untested evidence the Court evaluated the chances of the plaintiff's ultimate success in the action at 50% or less, but permitting its exercise if the Court evaluated his chances at more than 50%. 69. In Beecham, the primary judge, McTiernan J, had refused interlocutory relief on the footing that, while he could not dismiss the possibility that the defendant might not fail at trial, the plaintiff had not made out a strong enough case on the question of infringement [citation]. Hence the statement by Kitto J in the course of argument in the Full Court that it was not necessary for the plaintiff to show that it was more probable than not that the plaintiff would succeed at trial. 70. … There is then no objection to the use of the phrase "serious question" if it is understood as conveying the notion that the seriousness of the question, like the strength of the probability referred to in Beecham, depends upon the considerations emphasised in Beecham. 5 In ABC v O'Neill, Gleeson CJ and Crennan J at [19] said this: 19. … [I]n all applications for an interlocutory injunction, a court will ask whether the plaintiff has shown that there is a serious question to be tried as to the plaintiff's entitlement to relief, has shown that the plaintiff is likely to suffer injury for which damages will not be an adequate remedy, and has shown that the balance of convenience favours the granting of an injunction. These are the organising principles, to be applied having regard to the nature and circumstances of the case, under which issues of justice and convenience are addressed. We agree with the explanation of these organising principles in the reasons of Gummow and Hayne JJ (paras [65]‑[72]), and their reiteration that the doctrine of the Court established in Beecham Group Ltd v Bristol Laboratories Pty Ltd should be followed. 6 See also Castlemaine Tooheys Ltd v South Australia (1986) 161 CLR 148 at 153 per Mason ACJ and Australian Broadcasting Corporation v Lenah Game Meats Pty Ltd (2001) 208 CLR 199 at 219 per Gleeson CJ at [18]. 7 The background facts relied upon by the applicant are these.

Mr Weston's evidence 8 Mr Michael Weston is the Managing Director and Chief Executive Officer for AIH. He has been in that role for 11 years. AIH is part of what is called the "Global Budget Insurance Group". The shares in AIH are held by Budget Holdings Limited ("BHL") (80%) and as to the remaining 20%, by entities related to Mr Weston and AIH's Deputy Chairman, Mr Stephen Klinkert. Mr Weston says that in 2004 an associated entity, Auto and General Insurance Limited ("A&G"), was incorporated. The shares in A&G are held by BHL, Mr Weston and Mr Klinkert. Mr Klinkert and Mr Weston are Directors of AIH and A&G. 9 Mr Weston says that the two companies are managed as a group with management and service agreements entered into between the entities. AIH employs all labour for the group. The financial statistics deposed to by Mr Weston concern the group results which reflect the combined position of AIH and A&G. 10 AIH conducts a business which is divided into operations described as "Insurance Operations, Finance, Corporate Services, IT, Marketing & eCommerce, Strategic Alliances and Call Centre Operations". Each of the directors of each of these areas reports to Mr Weston as CEO. Mr Weston reports to Mr Klinkert, the Deputy Chairman of AIH. 11 Mr Weston says that Mr Chan was employed in the "Insurance Operations" aspect of AIH's business. He reported to the Associate Director of Underwriting, Mr Ray Edwards, who in turn reports to Mr James Lilley, the Director of Insurance Operations. Mr Lilley reports to Mr Weston. 12 Mr Weston says that over the past decade AIH has built its "Budget Direct Motor and Home" insurance business into a significant competitor of Suncorp and the IAG group. Mr Weston says that annually growth over the last five years has exceeded 20%. For example, he says: "A&G Group's gross profit for the financial years 2007 to 2008 was $133.9 million, for 2008 to 2009 was $158.4 million, and from 2009 to 2010 was $185.2 million". Mr Weston says that AIH was chosen by "Monthly Magazine" as "Insurer of the Year for 2010". 13 Mr Weston says that a significant factor in AIH's growth has been its ability to price "risk" more accurately than its competitors. In Mr Weston's opinion, AIH has developed "accurate methodologies to assess the risk to which it might be exposed if it offered insurance and to price the policies by which it might insure that risk". He says that by comparison with many of its competitors, AIH is a low priced insurer but, at the same time, "AIH has an industry leading Loss Ratio (which is a measure of profitability of our insurance policies) … of 53% against an industry average of 70% as at December 2009". 14 Mr Weston says that AIH's risk pricing capabilities and methodologies have been developed over many years of effort and refinement and he and Mr Klinkert have dedicated considerable time and effort to doing so over the last 10 years. As to differentiation, he says this: AIH's differentiation results from AIH's ability to analyse and quantify risk on a micro‑segmented basis. Micro‑segmentation is made possible because of the data AIH captures at policy inception, the storage and analysis of that data, the analytical processes the data is subjected to, the framework within which AIH conducts multi‑variant risk factor comparisons and the iterative process by which AIH tests and refines the factor assigned to each component of a prospective customer's risk profile. 15 Mr Weston says that the pricing capabilities and methodologies developed by AIH allow it to ensure that it more accurately prices each customer's risk profile so that it can offer them the best possible price for insurance. In Mr Weston's opinion, the capacity of AIH to capture data and use that data to set prices precisely according to the demonstrated risk is a "critical competitive advantage which AIH has over its competitors". 16 Mr Weston says that the "Underwriting Committee" of AIH is the forum through which all of its risk pricing analysis and decision‑making in relation to its insurance and pricing methodologies takes place. The Committee consists of Mr Klinkert, Mr Weston, Mr Edwards, Mr Lilley and also the Director of Finance, Mr Pringle and the General Manager of Margin Pricing, Mr Eu‑Gene Lee. 17 As to Mr Chan, Mr Weston says this. 18 Mr Chan commenced his career with AIH on 5 January 2009 by joining AIH's Corporate Development Program. He signed an Employment Contract dated 1 December 2008. In September 2009, Mr Chan accepted the role of "Risk Pricing Manager". This new role provided Mr Chan with access to "the most vital trade secrets within our organisation; information that only a handful of people have access to". From September 2009, Mr Chan attended the majority of the Underwriting Committee meetings together with Mr Duckworth, who was the other Senior Pricing Analyst employed by AIH. Mr Weston says that in Mr Chan's role he was exposed to all aspects of AIH's risk pricing methodologies; attended many meetings with senior people within AIH in the area of risk pricing where aspects of AIH's risk pricing methodologies were discussed; and was "tasked with coordinating and completing the next major step in the ongoing development of AIH's Component Ratings model … which is currently in the final stages of specification". 19 Mr Weston says that "all the details" of the new "Component Rating Model" were made available only to "the members of Mr Edwards' team, including Mr Duckworth, Mr Chan, Mr Edwards and Mr Klinkert". 20 As to the implications for AIH of unauthorised use or disclosure of the content or information relating to AIH's methodologies and the details of its Component Risk Model, Mr Weston says this. The Australian Motor Insurance premium pool is in excess of $6 billion annually. Suncorp controls approximately one third of the premium pool through its brands AAMI, GIO, Suncorp, APIA and other group brands. Suncorp operates what Mr Weston describes as a "One Company, Many Brands Strategy". Mr Weston says that AIH's competitive advantage reflected in its preferential loss ratio of 53% relative to an industry average of 70% would be "placed in serious jeopardy if Suncorp was to gain any insight into the way AIH has been pricing risk and (even more concerning), if it was to gain any knowledge of the workings and modelling currently being undertaken for the new Component Rating Model. The ability to close the pricing gap that exists between AIH and its competitors is the single largest threat to AIH's business".

Mr Lilley's evidence 21 Mr James Lilley is AIH's Director of Insurance Operations and has been in this role since 2004. He says AIH specialises in motor vehicle and household insurance. Mr Lilley identifies in his affidavit AIH's major competitors which include Suncorp trading under its various insurance brand names. Mr Lilley is responsible for all risk rating and claims service aspects of AIH's motor and home insurance business. He is responsible for underwriting, product development and maintenance, risk pricing, risk management, claims, administration and service and assessment of risk. The Associate Director of Underwriting, Mr Ray Edwards, reports to him. 22 In 2008, Mr Lilley considered Mr Chan's application for employment in AIH's "Corporate Development Program". Mr Lilley was provided with a copy of Mr Chan's resume which Mr Lilley exhibits to his affidavit. In that resume, Mr Chan says that he obtained a Master of Business Administration (MBA) in November 2005 from the University of Queensland having obtained a Bachelor of Information Technology (B.IT) in September 2001 from the Queensland University of Technology. He speaks Mandarin and he has a qualification in teaching English as a foreign language. The resume says that Mr Chan exhibits these skills: "Experienced at mentoring and developing team members; Highly advanced MS Excel and Modelling skills; Excellent Oral presentation skills with considerable experience with both presentations and workshop facilitation; First class Analysis and Research skills; Proficient in Programming languages including SQL". 23 In the resume, Mr Chan says that he was a Commercial Analyst employed by Optus full time from September 2006 to December 2007 and his responsibilities included supporting the business "by creating and presenting profitability and risk reporting". He cites as his achievements with Optus that he "Developed and project managed a new regime of customer profitability and risk reporting for the top 15 managed customers"; and "improved the profitability of, and mitigated risk from key contracts by supporting bid teams as demonstrated in the Victorian Government and NSW Government contracts". 24 The resume says that Mr Chan worked as a Value Based Pricing Manager for Telstra from July 2006 to September 2006 responsible for developing "value based pricing proposals based on detailed customer research and understanding" and ensuring "appropriate integration of pricing constructs into business case development". From January 2005 to January 2006 Mr Chan worked as a Team Leader and Senior Pricing Analyst for AAMI Insurance responsible for planning and forecasting "growth and profitability targets for all Queensland portfolios". The resume records as one achievement in that period "successfully turned around an unprofitable portfolio using targeted pricing changes and marketing initiatives". Mr Chan also worked as a Pricing Analyst for AAMI Insurance in the period May 2003 to December 2005. 25 Plainly, Mr Chan is an intelligent, educated man with post‑graduate qualifications who exhibits strong analytical skills.

Mr Chan's contract 26 In December 2008, Mr Chan accepted a position in AIH's program. Mr Lilley says Mr Chan commenced work on 5 January 2009 although Mr Chan in his affidavit says he commenced work on 14 January 2009. Nevertheless, Mr Chan signed an Employment Contract dated 1 December 2008 which is annexed to Mr Lilley's affidavit. By that contract, Mr Chan entered the Corporate Development Program. His total gross remuneration was $96,000. The contract is signed by Mr Chan at p 12 and is witnessed by his father, Mr Jeffrey Chan. The contract contains three schedules comprising nine pages in all. Each page is endorsed with the words "I have read, understand and agree with the above" and immediately under that statement is Mr Chan's signature and the signature of Mr Jeffrey Chan as witness. 27 Schedule 2 sets out Mr Chan's obligations in relation to confidential information in these terms: Obligations in relation to Confidential Information 1.2 The Employee acknowledges that: a. Confidential Information is solely and exclusively the property of the Employer or other companies in the Group; and b. The Employee is subject to obligations in relation to Confidential Information by reason of this Agreement; and c. The Employee is subject to obligations in relation to Confidential Information under the common law; and d. The Corporations Act 2001 creates certain obligations in respect of the Employee's use or disclosure of Confidential Information. 1.3 Unless required to do so by the Employer, its auditors, or by law, the Employee will not at any time during, or after the termination of, employment with the Employer: a. use any Confidential Information; or b. disclose any Confidential Information to any person, without the previous consent in writing of the Employer. 28 Clause 1.4 sets out uses of confidential information by the employee during employment consented to by the employer. Clause 1.5 is in these terms: 1.5 The Employee will not at any time during, or after the termination of, employment with the Employer use or attempt to use any Confidential Information which may be acquired in the course of employment with the Employer in any manner which may injure or cause loss or be calculated to injure or cause loss to the Employer or other companies in the Group. 29 Clause 1.10 is in these terms: Obligations continue after employment ends 1.10 The Employee's obligations under this clause: a. continue after termination of the Employee's employment until the Confidential Information is available in the public domain; b. are enforceable by the Employer at any time by legal process; c. are for the Employer's continuing benefit; and d. are in addition to the Employee's obligations to the Employer under the common law and pursuant to the Corporations Act 2001 as an Employee of the Employer. 30 "Employer" is defined to include AIH and "other companies in the Group". The term "Business" means the "business activities conducted by the Employer, being the provision of insurance products of the following types; motor vehicle insurance; home and contents insurance; and any other type of insurance product or activity being developed for provision, or being provided or undertaken, by the Employer". "Confidential Information" is defined, relevantly, in these terms: "Confidential Information" includes, without limiting its ordinary meaning, information of the Employer, or other companies in the Group, that is not Available in the Public Domain and; I which has been specifically designated by the Employer as confidential; or II which by its very nature might reasonably be understood to have been disclosed in confidence; or III which may be of commercial value to a competitor of the Employer or other companies in the Group; or IV information that is related to the Employer's Business operation and that falls within any of the following categories: A. intellectual property … B. software … C. information collected about customers obtained during or for the purpose of a proposal for insurance; D. information provided by … a customer where a customer makes a claim under any Employer insurance policy; E. … F. the terms and conditions of any insurance offered … not otherwise in the public domain; G. the terms and conditions of any insurance that the Employer may be considering offering; H. methods used by the Employer to determine premiums for insurance products offered by the Employer; I. claims made … J. claims paid … K. legal advice … L. any policy, practice or guideline … M. information in databases or otherwise collected, created or recorded by the Employer which contains an analysis of information about customers and the terms of any contractual relationship; types of insurance obtained, claims history, premiums paid, or profit generated; N. information about the Employer's systems, business procedures, ratings and underwriting rules and structures; O. detail of any contractual relationship … P. any plans or proposals relating to the business of the Employer including marketing and operating plans; Q. information relating to the budgets, profit and loss, cash flow, profit, borrowings … R. … S. details of any research conducted by or obtained for the benefit of, the Employer relating to its Business. [emphasis added] 31 Apart from these obligations, Schedule 3 sets out the following further obligations: 1. Protection of goodwill and Confidential Information after cessation of employment 1.1 Nothing in this Agreement shall be construed to limit the Employee's fiduciary duties or duty of fidelity to the Employer. 1.2 … For the protection of the Employer's goodwill in the Business and to protect the Confidential Information, the Employee expressly agrees to comply with the obligations in this clause. 1.3 The Employee agrees that the Employee will not, during each of the Restricted Periods set out in Item 7 of Schedule 1 after the Employee's employment ends, within each of the Restricted Areas set out in Item 8 of Schedule 1, do any of the following: a. perform work (whether as an employee, contractor, director, partner or otherwise and whether voluntarily or for payment) that is or involves the analysis of, reporting on or review of information about insurance policies, insured persons or entities, insurance premiums, insurance claims, actuarial services, underwriting, or insurance product pricing for any person or entity, the performance of which work is for, or is for the benefit of, directly or indirectly any person or entity whose business is of a similar nature to or is or is likely to be a competitor of the Business of the Employer; b. be involved, in any capacity that involves active participation, in any undertaking or activity for any person or entity, which undertaking or activity is, or is likely to be, either in direct or indirect competition with the Business of the Employer or for a person or entity whose business is of a similar nature to the Business of the Employer; c. use or disclose any Confidential Information; d. … e. … f. act in conflict with the Employer's best interests; g. … 1.4 In clause 1.3: a. A business which is, or is likely to be a competitor of the Business of the Employer or which is of a similar nature to that of the Employer include, without limitation, the following specific businesses to the extent to which they engage in any of the business activities of the Business of the Employer; I OUTsurance Australia Insurance Company Pty Ltd … II Suncorp‑Metway Limited or any of its Associated Entities, including RACQ; Promina Group Limited or any of its Associated Entities, including AAMI, Vero; III Insurance Australia Group Limited … … 1.6 Clause 1.3 has effect as if it were a number of separate clauses, each one being severable from the others. The separate clauses consist of the introductory words in clause 1.3 combined with each of the Restricted Periods in Item 7 of Schedule 1, then combined with each of the Restricted Areas in Item 8 of Schedule 1, then combined with each of the separate restricted activities specified in paragraph 1.3. If any of the separate clauses is invalid or unenforceable for any reason, then the provisions of clause 25 (Severability) of your employment contract will apply. 1.7 The Employee acknowledges that: a. each restriction specified by this clause is in the circumstances reasonable and necessary to protect the Employer's legitimate business interests and necessary to protect the goodwill of the Employer; b. if any person for any reason alleges that any restriction in this clause is unenforceable at law or in equity, then the provisions of clause 25 (Severability) of your employment contract will apply. [emphasis added] 32 Schedule 1 contains Items 7 and 8 in these terms: ITEM 7 - RESTRICTED PERIOD - Schedule 3 1. 12 months 2. 9 months 3. 6 months 4. 3 months … ITEM 8 - RESTRICTED AREA - Schedule 3 1. Australia 2. New South Wales 3. Victoria 4. Queensland 5. South Australia 6. Western Australia 7. Australian Capital Territory 8. Northern Territory 9. Tasmania 10. within a [15] kilometre radius from the Employer's premises at Toowong, Kawana Waters and Northlakes

Mr Lilley's further evidence 33 Mr Lilley says that the program offered by AIH is similar to a cadetship. Employees are assigned to different areas of AIH's business for experience. An employee is then offered a permanent role in a specific team. Mr Chan worked in AIH's Call Centre and was then employed in the "Insurance Operations Department". On 2 December 2009, Mr Lilley prepared and sent correspondence to Mr Chan confirming his appointment to the position of "Risk Pricing Manager" in the Underwriting Department. Mr Chan signed the letter on 3 September 2009. The letter said this: It gives me great pleasure to confirm my offer to you of the position as Risk Pricing Manager. This promotion will commence on the 27 August 2009. In the role as Risk Pricing Manager you will report to the Associate Director Underwriting. Your new salary (expressed on a Total Employment Compensation (TEC) basis) will be $100,000 per annum … Other conditions expressed in your employment agreement the 1 December 2008, including Schedule 2 regarding Confidential Information and Schedule 3 regarding protection of goodwill and Confidential Information remain unchanged. … 34 Mr Lilley says that in the role of Risk Pricing Manager, Mr Chan worked with Mr Trevor Duckworth. Both men reported to Mr Edwards. Mr Lilley says that Mr Chan's role involved his gaining a "thorough and intimate understanding of AIH's current risk pricing methodology for its motor insurance products"; and assisting in "designing and developing a new risk pricing model" called the Component Rating Model; and contributing to the "strategic development of the motor and home products". 35 Mr Lilley says that as part of Mr Chan's role, he was privy to "highly sensitive and commercially confidential information" relating to the Component Rating Model. He says such information was held by "a very small number of individuals in the company". 36 As to the Component Rating Model, Mr Lilley says that AIH has operated a risk rating model for its motor insurance products for about 10 years. For some years prior to Mr Chan's employment, AIH had been exploring "new and innovative ways in pricing insurance with a view to developing a new Component Rating Model". He says that the initial concepts for the design of the new model were in place prior to Mr Chan's employment however Mr Chan was closely involved in the most recent modelling and development. He says sufficient modelling has now been done to produce "a prototype engine and begin testing. However, the actual development of the Model has not yet begun. Mr Chan was directly involved in this research process". Mr Lilley says this: 21. In order to manage the detailed design of the Component Rating Model, Mr Chan was required to analyse the existing system methodology and have intimate knowledge of AIH's current systems outputs. The outputs include specific rating factors and rating tables which formed the core of premium pricing. These outputs are treated as being extremely confidential within AIH. These outputs are discussed further in Mr Ray Edwards' Supplementary Affidavit. 22. Mr Chan was appointed specifically to transform the initial concept design and develop the Component Rating Model. Mr Duckworth and Mr Chan were the key authors of the Component Rating Model. However, Mr Chan solely coordinated inputs to the Model's development, particularly during Mr Duckworth's recent extended period of long service leave. 37 The reference in para 21 of Mr Lilley's affidavit to a Supplementary Affidavit of Mr Ray Edwards is a reference to a further affidavit relied upon by the applicant which has been treated as confidential and is sealed. That affidavit describes the content of the confidential information. For obvious reasons, I will not describe in these reasons the content of the matters referred to by Mr Edwards. However, I have considered the affidavit in determining whether a serious question is made out by the applicant of whether the information said to be confidential is confidential. 38 Mr Lilley says that the only other personnel involved in the design and development work for the model were Mr Klinkert and Mr Edwards apart from Mr Lilley, Mr Duckworth and Mr Chan. The development group met every two to four weeks. Sometimes an IT person would be involved. Mr Lilley says that through this process Mr Chan became aware of the "inner‑workings of AIH's Margin Pricing Department". Mr Chan held discussions with the General Manager of Margin Pricing, Mr Lee. Mr Lilley says the Margin Pricing department determines "what margin is acceptable to offer in order for a motor insurance product to be sold at the lowest price sustainable after taking inputs from the Risk Pricing Department". 39 As to the confidentiality of the model, Mr Lilley says that it will determine the "'Risk Cost' per insurance risk". The Risk Cost is equivalent to the wholesale cost of a manufactured good. 40 As to differentiation, Mr Lilley says this: 31. The concept of an insurance company rating for individual risks or 'component pricing' is not new or novel. However, the methodology and analysis undertaken by AIH to determine its wholesale and retail prices based on such an individual component rating system is crucial to it being able to price its products in a competitive manner and maintain its competitive edge in the market. 32. The Component Rating Model is treated by AIH as the most confidential project currently (or previously) underway and knowledge of the detail of the Component Rating Model has been limited to those specific members of the Team for this reason. Not even the Underwriting Committee is completely privy to the same level of detail as Mr Chan. … 34. If one of AIH's competitors was to apply a similar risk and pricing methodology, it would allow the competitor to price its products similarly and would therefore jeopardise AIH's entire price positioning differentiation. 41 Mr Lilley says that the model is currently specific to AIH's motor insurance division. He says, however, that "the methodology, design and intellectual property in the Model is transferable" and capable of being used to "create a new or similar pricing model for [AIH's] home insurance policy". 42 As to the circumstances of Mr Chan's resignation, Mr Lilley says this. 43 Mr Lilley was told by Mr Edwards on the morning of 3 June 2010 that Mr Chan had resigned. Mr Lilley, with Mr Edwards, met with Mr Chan that afternoon. Mr Chan said that he had resigned because he could not see any career development in the current role; the Underwriting Department was a slow and stable environment and all decisions had to be referred to the Deputy Chairman. Mr Lilley says he debated those matters and asked Mr Chan whether he would consider working in a different area within AIH and he said probably not. Mr Lilley says that on 4 June 2010, Mr Chan told him that he would be going where he had been planning to go. Mr Lilley says that he understood that Mr Chan was planning to work for Optus. Mr Lilley says that on 15 June 2010, he was told that Mr Chan would be commencing employment with Suncorp in Suncorp's motor insurance division. Mr Lilley says that on 15 June 2010, he, with others, met with Mr Chan and he asked him where he was going to work. Mr Chan said he preferred not to comment. Mr Lilley says that he responded by saying "I know where you are going" which prompted Mr Chan to say that he was leaving to go to work for Suncorp. 44 Mr Lilley says that he asked Mr Chan what role he would be performing at Suncorp and Mr Chan said that he would be a "marketing analyst". Mr Lilley says that he told Mr Chan that his understanding was that Mr Chan had been hired to "perform a product portfolio role which has responsibility for governing direction on how products and pricing are managed". Mr Lilley says Mr Chan said that he would be "performing a Marketing Analyst role". 45 Mr Lilley says this: 50. I then said to Mr Chan words to the effect of why he had previously lied about where he was going. Mr Chan responded to me with words to the effect that he [had] been given a verbal offer of employment from Optus, and it was on the strength of this that he resigned but that this later "fell through" and he was then offered the role with Suncorp. Mr Chan also said words to the effect that he thought that he may have had a restriction clause in his contract and because of that it would be easier not to tell anyone that he was going to work for Suncorp. 51. Mr Chan then said words to me to the effect that when he was offered the role at Suncorp he was not sure whether or not he had a restriction clause in his contract and that it was only recently when another staff member (Mr Ben Hallam) was given a new employment contract that contained restriction clauses that he wondered if he had a restriction clause. I said to Mr Chan words to the effect that if he was not certain what clauses were in his contract he could have contacted our Human Resources Department and asked for a copy of his contract. I also said to Mr Chan words to the effect that I was happy to give him a copy of his contract immediately. Mr Chan did not accept my offer. 52. Mr Chan then said to me words to the effect that he felt intimated by the restriction clause in his contract … 53. Mr Chan then said to me words to the effect of whether or not he could "negotiate" the restriction clause. I said to Mr Chan words to the effect that I could see no reason why AIH would agree to a lesser restriction and advised Mr Chan that he would not be able to work for Suncorp in certain roles. I also said words to the effect that: (i) the employment contract was a legally binding document; (ii) I was concerned that Mr Chan appeared to have deliberately misled AIH about his future employment and that he appeared to be intent on breaching his contract. 46 Mr Lilley says that Mr Chan left the meeting and said he would like to think about his situation. On 17 June 2010, Mr Lilley received a call from Mr Chan. Mr Lilley says that Mr Chan said he was "uncomfortable with where things had been left". Mr Lilley says that Mr Chan "wanted to come to an agreement so he could work for Suncorp". Mr Lilley says Mr Chan asked whether AIH would reduce the restriction in his contract from 12 months to 1 month. Mr Lilley says that he told Mr Chan that "this would come down to the role he would be performing at Suncorp and that he needed to provide AIH with a copy of his letter of offer with Suncorp and his role description". Mr Lilley says that Mr Chan said that he "would not be involved in pricing or rating, but that his role would involve him talking to the Suncorp pricing team which is based out of Sydney". Mr Lilley said that he would need to see a role description in order to more fully consider AIH's position and risk. 47 Mr Lilley says that Mr Chan did not supply a copy of his position description at Suncorp until 5 July 2010.

Mr Edwards' evidence by his first affidavit filed 14 July 2010 48 Mr Edwards is AIH's Associate Director of Underwriting and has held that position for three years. He manages the "Underwriting and Product Management function" for AIH. On 3 September 2009, Mr Chan accepted the position of "Risk Pricing Manager" in the Underwriting Department reporting to Mr Edwards. Mr Chan resigned by letter on 31 May 2010. Mr Edwards says that when Mr Chan handed him the resignation letter, he asked Mr Chan where he was going to work. Mr Edwards says Mr Chan said he was going to work at Optus as he had worked there before. Mr Edwards asked Mr Chan whether he would like Mr Edwards to make representations to the Director of Insurance Operations or the Managing Director as to any matters of concern to Mr Chan. Mr Chan said that he did not wish Mr Edwards to do that and that "his mind was made up". 49 Mr Edwards says that Mr Chan told him that Optus had offered him approximately $30,000 more than he was currently receiving. Mr Edwards says that he told Mr Chan that AIH could not deliver that sort of increase to Mr Chan "overnight". 50 Mr Edwards says that he learnt on 15 June 2010 that Mr Chan would be commencing work with Suncorp and Mr Edwards understood that Mr Chan's role would "involve pricing". Mr Edwards says that at a meeting on 15 June 2010 Mr Chan "after some hesitation eventually said words to the effect that he was not going to Optus but was actually going to work for Suncorp", in response to Mr Lilley's question of "Where are you going to work?". Mr Edwards says that Mr Chan told those at the meeting that he would be "undertaking a marketing role at Suncorp". Mr Edwards says that Mr Lilley told Mr Chan that his employment contract contained certain restraints and that he had a requirement to comply with these. Mr Edwards has had no further contact with Mr Chan since 15 June 2010. 51 As to AIH's current pricing model, Mr Edwards says this in his open affidavit. 52 Since the commencement of AIH's insurance operations in September 2000, AIH has continuously developed a rating structure which Mr Edwards calls the "current model". That model has delivered substantially better than market results in terms of underwriting profitability which has enabled AIH to invest in expansion of the insurance business. In relation to underwriting profitability, Mr Edwards says that AIH has a market‑leading claim ratio and in terms of business growth for the year ending 30 June 2009, AIH's portfolio of cars insured increased by 13% over the previous year. He says that AIH has created rating structures which differentiate it from mainstream insurers by recognising additional characteristics of good and bad "risk" that in the opinion of Mr Edwards allows AIH to be highly competitive in the Australian market. He says the information captured by AIH is used in the rating analysis and incorporated into "AIH's rating engine and/or underwriting acceptance rules". He says that to his knowledge which is based on 39 years in the insurance industry, "the larger insurers, including Suncorp, do not collect the same detail (for commercial reasons or otherwise) as AIH and are therefore unable to, or are inhibited from, applying competitive pricing at similar levels of sophistication". 53 He says that "the storage, analysis, development and maintenance of AIH's structures for motor insurance is concentrated within a very small department and not generally accessible to other internal staff for security reasons". 54 Mr Edwards also says this: 23. Since early 2007, AIH has been conducting analysis and development of a new pricing structure (the "Component Rating Model"). The purpose of this is to analyse claim costs at even more granular levels of specific claim type and determining the cost drivers (rating factors) and relativities as they apply (or do not apply) to each type of claim. AIH has largely developed the structure and attributes of this new rating system. Since coming into the department Mr Chan was directly involved in this development. 24. In addition to pricing attributes of the system, there is a considerable potential to apply other "risk selection" criteria that would further enhance AIH's competitive advantage. 55 Mr Edwards says that Mr Chan either has or by reason of his work ought to have obtained an intimate knowledge of AIH's motor rating structure, data collection and statistical support systems based on access to sensitive rate tables, demographic data, underwriting procedures and data analysis procedures. He says that Mr Chan by his role either has or should have an "intimate knowledge of future motor rating developments including the analysis and development of the future rating system that may contribute substantially to our keeping ahead of much larger competitors in terms of performance". 56 He also says that Mr Chan from his work will have "gained some knowledge of and must have become aware of demand based margin optimisation and how it is deployed and has had interactions with the margin pricing team; and AIH's high level strategic plans and existing/proposed developments including strategic alliance developments, budgets and interaction with executive committees and other management, particularly on pricing". Mr Edwards also says that Mr Chan has had exposure to operation and marketing systems within AIH and that "due to Mr Chan's intimate knowledge of AIH's pricing policies and processes he has the ability to accelerate the process of a new component model for our direct competitors, particularly in the motor insurance industry".

Mr Duckworth's evidence 57 Mr Duckworth is employed by AIH in the position of Risk Pricing Manager within the Underwriting Department. In that role Mr Duckworth analyses all aspects of risk pricing and creates new pricing structures which are designed to increase the competitiveness of AIH's policies in the marketplace and to maintain and increase AIH's profitability. The role involves undertaking reviews in collaboration with the Underwriting Committee to adjust rating calculations. Mr Duckworth says that he worked closely with Mr Chan as Mr Chan was also a Risk Pricing Manager in the Underwriting Department. Mr Duckworth says that Mr Chan was "provided with, and became privy to, in‑depth information about AIH's current pricing methodology and he also assisted in designing and developing a new risk pricing model (the Component Rating Model)". 58 Mr Duckworth says that he and Mr Chan were "privy to highly sensitive confidential information relating to AIH's current pricing methodology and the Component Rating Model". 59 Mr Duckworth says that he and Mr Chan had the highest level of access to such information. Only seven other people in AIH had access to the summarised reports he and Mr Chan prepared on both the current pricing model and the Component Rating Model. Those seven individuals were the six members of the Underwriting Committee and Mr David Williams, the Motor Products Manager. Mr Duckworth says that when Mr Chan joined the Underwriting Department, Mr Duckworth instructed Mr Chan as to the methodologies by which AIH rates its insurance premiums, the different factors AIH applies in determining rating and the 20 to 30 variables that AIH uses to determine the pricing of risk. Mr Duckworth says that the content of these matters is set out in the Supplementary Affidavit of Mr Edwards. 60 Mr Duckworth says this. 11. I also disclosed to Mr Chan other information concerning everything AIH uses to price risk, including the formula AIH utilises to determine the rates, the factors and variables that AIH rates on, the factors that AIH use and includes detail of the specialist niches of AIH for example, the specific manner in which AIH handles risk assessment on age. … 12. The information referred to in the above paragraph is kept secret by any of it being kept in locked areas and/or, in the case of any soft data recordings, by being password protected on computers. 13. When discussing this information for the first time I said to Mr Chan words to the effect that the reason for the information being kept in locked areas, and being password protected, was that the information represents the "holy grail" of AIH's intellectual property and that access to this information was privileged and confidential and not to be used or discussed outside of our work for AIH. 61 As to the restrictions contained in the employment contracts, Mr Duckworth says that he had a discussion with Mr Chan "early on in his employment about the restrictions". Mr Duckworth says that he said words to the effect to Mr Chan that "we were restricted from working for another insurance company in a similar pricing role for a certain period". Mr Duckworth says that Mr Chan "replied with words to the effect that he did not think the restrictions were worth the paper it was written on". Mr Duckworth says he told Mr Chan that he did not agree with that view. Mr Duckworth also says that Mr Chan responded by saying "words to the effect of 'if it came to it I probably just wouldn't tell them where I was going to work'". 62 Upon learning of Mr Chan's resignation, Mr Duckworth says that he asked Mr Chan on a number of occasions where he was going and was told by Mr Chan that he was going to a commercial role not related to pricing.

Mr Edwards' supplementary affidavit 63 Mr Edwards has sworn a further affidavit dated 14 July 2010. That affidavit sets out the features of AIH's rating methodology and deposes to examples of its application. The affidavit also provides a description of the Component Rating Model. The affidavit further describes Mr Chan's involvement in the Underwriting Department from September 2009 and his engagement in the development of the new model. Mr Edwards says that the majority of Mr Chan's time was taken up with the role of developing the model and that Mr Chan took proposals on the model to the Underwriting Committee. He says that Mr Chan was intimately involved with the project and was working on the risk cost for each claim component of the model to ascertain a base risk cost for each component and then segment each component with the allocated variables. Mr Edwards says that Mr Chan undertook extensive analysis and experimentation with the data. Mr Edwards also says that the process and methodology that AIH has been using to "turn this complex theoretical model into a practical reality is a closely guarded trade secret of AIH". He also says that Mr Chan has further created the "first cut" of a rating structure for a claim component system so that each component can be allocated separate premiums. He says that Mr Chan created this within the statistical analysis system and it is this rating structure proposed by Mr Chan that will be provided to AIH's IT Department to build a prototype program and commence testing an analysis of the model. 64 Mr Edwards attaches to his affidavit a specification document entitled "Component Risk Pricing Specification". The document seems to have been created on 28 September 2009. It is sponsored by Mr Edwards and its authors are Mr Chan and Mr Duckworth. The version attached to the affidavit is version 1.7. In the version control section of the document there are references to version 1 dated 28 September 2009 to version 1.6 dated 18 May 2010 which seems to have been a revision after a rating subcommittee meeting on 18 May 2010 which gave rise to minor corrections and the inclusion of some matters. There is no reference in the version control section to version 1.7. There is a reference to version 1.8 dated 31 May 2010 based upon revisions after a rating subcommittee meeting of 28 May 2010 which addressed particular matters. Mr Chan resigned on 31 May 2010 and there may be some question as to the extent of Mr Chan's contribution to version 1.8 or perhaps version 1.7. 65 The specification document sets out a descriptive and applied analysis of the approach to component risk pricing to be adopted by AIH. The document under the heading "Notes for Factor Table" makes reference to 34 different factors which interact with the claim components and potentially non‑claim components and the utility of the factors in determining the premium. 66 As an introductory description, the document says that AIH proposes to move to a form of "component pricing" on the footing that "component pricing allows different cost drivers and relativities for each component of the price to be explicitly incorporated directly into the rating structure" and the price consists of two components described as "claim components" and "non‑claim components". The document provides specifications for the claim components only. The utility of claim component pricing is said to be that each risk premium component is measured against its claim cost component to isolate the actual cost so that risk might be priced at a sustainable margin. The specification says that the proposed approach reflected in the document "is a philosophical shift away from current method of providing loss ratio parity, to targeting a particular 'adequacy' ratio of 100% for each component. This shift in workflow forces us to clearly demarcate risk (claims cost) related adjustments and non‑claim components adjustments. Furthermore, once the claims cost are explicitly calculated, it enables (or forces) the explicit creation of separate non‑claim components". 67 The document identifies the implications of such an approach, the requirements it demands, the claim component allocation approach, the component specifications, the component premium precedents and the "factor derivation method". The document also contains notes for each of the 34 factors in the factor table. The document sets out some sample rate tables and an example of the application of the rating steps. 68 I am satisfied that having regard to the affidavit material filed in support of the application by the applicant that there is a serious question to be tried as to the factual contention that the information relating to the applicant's current pricing methodologies and information relating to the proposed Component Pricing Model is confidential information imparted to Mr Chan in the course of and by reason of his employment having regard to his role "Risk Pricing Manager".

Mr Chan's evidence 69 Mr Chan by his affidavit material puts this question of confidentiality in issue. 70 He disputes AIH's contentions that the information is confidential and says that this is especially true in relation to the component pricing work and analysis reflected in the specification document annexed to Mr Edwards' affidavit as that work and the document simply reflect a well known and orthodox approach to costing each of the components influencing risk to be priced by an insurer in offering a particular form of insurance product to the market. 71 In that regard, Mr Chan refers to a paper entitled "Controlling Profit Margins through Component Pricing" by Mr David Isaacs and Ms Caroline Breipohl which was presented to the Institute of Actuaries in Australia at a seminar between 16 and 19 October 2005. Mr Chan says that this paper was given to him by AIH for consideration and assessment in undertaking the work he undertook in developing or assisting in the development of the Component Pricing Model described in the affidavits of AIH's witnesses. Mr Chan notes on the first page of the document after the Table of Contents (p 100 of Mr Chan's affidavit) that component pricing is described in virtually the same terms, as a descriptive term, as that quoted above from the AIH specification. In the paper, component pricing is described as: "… the process that allows different cost drivers and relativities for each component of the price to be explicitly incorporated directly into a rating structure. This paper demonstrates how insurers who are not adopting component pricing can be significantly mispricing relative to target profit margins at an individual customer level. It also shows some of the other benefits of adopting component prices. 72 The paper is quite detailed. It provides an introduction to component pricing together with examples of applications of a method of costing and then pricing the components of risk. It sets out the benefits of component pricing and the utility of component pricing in portfolio monitoring. It discusses the relevance of component pricing and a particular methodology which is reflected in rating structures. It also discusses the effect of component pricing in determining the level of the risk premium. It discusses expected profit dispersion and expected profit margins by percentiles. 73 It concludes in this way: Many insurers are unable to fully realise the benefits of improved sophistication in pricing analyses due to archaic and potentially inflexible rating structures. As the insurance market becomes increasingly competitive the lack of control over target profit margins at a segment level resulting from the constraints imposed by legacy rating structures can become a serious disadvantage. Additionally, traditional rating structures are impacting an insurer's ability to quickly respond to market pressures and emerging experience. One way to overcome these shortcomings is to implement component pricing: a mechanism that allows insurers to properly reflect the interactions between different cost drivers when they price. By allowing the flexibility of additive and multiplicative table structures, component pricing gives the pricing practitioner better control of the target profitability by segment and allows more transparent implementation of key market strategies. … Whilst moving to component prices may be a time consuming and expensive exercise, advances in IT mean that such a change is now a practical reality. The expected benefits of moving to component pricing, particularly with regard to profit control to prevent unintentional mispricing, are significant. Therefore, we believe that the shift to component pricing will become inevitable for many insurers wishing to maintain their profitability in a competitive market. [emphasis added] 74 It may be that the paper by Isaacs and Breipohl anticipates a part of the approach adopted by AIH in formulating its version of component pricing or the integration of a component pricing methodology with its existing approach to isolating the components of risk so as to accurately determine the cost components of risk with a view to determining a sustainable price margin in setting premiums for particular risks. The application of component pricing within the context of AIH's business method, market segment and business practices is the differentiating factor peculiar to AIH that is said, by the witnesses, to be the instrument by which AIH, as Isaacs and Breipohl note, will "maintain [AIH's] profitability in a competitive market". 75 Mr Chan says that at no time prior to his last day of attending work for AIH did anyone ever say to him that there was "any particular confidentiality attached to the model". He says that the floor area in the Underwriting Section where he worked was secured externally but "once you gained access to the floor there was no physical security around the area where I worked". He says that it was his understanding that any AIH employee could access the floor using their electronic passkey, including employees from the Northlakes office and the Kawana Waters office. Mr Chan says that whilst his computer was "password protected" and there were some documents that were also password protected, his work was otherwise left out on his desk and could have been accessed by anyone. He says while working on the model he had access to "historical customer data on claims and premiums" which was de‑identified. He says he also had access to risk pricing tables. He says that those tables were stored in a password protected Microsoft Excel file. He also says that the types of risk pricing tables used by AIH could be worked out by a competitor in various ways and the information generated by the tables is only the risk/cost price for the relevant insurance. In order to work out the final price to be charged for insurance cover to be offered to a customer, a person would need to undertake further steps to work out the demand price and then work the highest margin that can be applied in order to be able to maximise profit and/or growth. He says he was not part of the demand pricing team during his employment with AIH and nor did he understand the processes they used in order to determine the final price for insurance quotes. 76 Although there is a controversy on the facts between the parties as to these issues, I am satisfied that there is a prima facie case made out that the information is confidential both in relation to the Component Pricing Model and the existing pricing methodologies and was treated by AIH as confidential as the witnesses assert. Mr Chan seems to accept that some of the information was password protected. I am satisfied that a prima facie case is made out, on the basis of the affidavits, that the information relating to cost component analysis in the applied context of AIH's business is inherently confidential. 77 As to the standing of the applicant, Mr Chan says that AIH does not carry on any business and nor is it an insurer or underwriter and it does not carry on any business in the insurance industry. He says he was primarily involved with that part of the business known as "Budget Direct" and that "Budget Direct" insurance is arranged by A&G Insurance Services Pty Ltd on behalf of an insurer called Auto & General Insurance Company Limited. Mr Chan annexes to his affidavit references to websites which explain the "Budget Insurance Group". He also annexes printouts from the website under the heading "About Us" which describes Budget Direct. He also annexes a business name search of "Budget Direct" which shows that "Budget Direct is a business name operated by A&G Insurance Services Pty Ltd". He says that AIH is simply an employer of labour and provides certain services. 78 Accordingly, it follows, it is said, that either AIH has no standing to maintain proceedings and interlocutory proceedings for relief in respect of contended or threatened breaches of confidential obligations as it has no relevant interest or alternatively the particular role played by AIH should be weighed heavily in exercising the discretion as its role seems to be a particular and limited one. 79 Notwithstanding these submissions, I am satisfied, having regard to the evidence of Mr Weston, that the conduct of the insurance business is conducted on an aggregated basis in which AIH and A&G are participants and in determining whether AIH has made out a prima facie case I am satisfied that there is at least a serious question that it has proper standing to seek relief in respect of the contended conduct on the part of Mr Chan and otherwise has a sufficient interest. 80 As to the central question of Mr Chan's conduct, Mr Chan says this. 81 Since about March 2010, Mr Chan has been approaching recruitment agents to seek a new role outside AIH. Many possibilities have been investigated. During the period 20 to 25 March 2010, Mr Chan sought a role with Optus. Mr Chan says that, having regard to emails he annexes to his affidavit, that the remuneration for the Optus job did not match his needs and the application did not proceed. He says he sought employment with Suncorp in a role entitled "Leader Business Intelligence". He says he was rejected for this role. He sought a position with Toll Global Holdings. He was unsuccessful. He eventually found a job advertisement and role description for a position described as "Queensland Motor Portfolio Manager" for Suncorp which is his present position. He applied. 82 He had an interview with Mr James Fitzpatrick who is the Executive Manager of the Motor Portfolio Personal Insurance section of Suncorp, on 20 May 2010. He then had a further interview with Mr Stephen Jeffries who is the Executive Manager Home Portfolio Personal Insurance section of Suncorp. He had a final interview with Natasha Fenech who is the person James Fitzpatrick reports to. 83 Following these interviews Mr Chan was offered the role as Queensland Motor Portfolio Manager for Suncorp. He accepted it. The description for the role contained in the advertisement is this: We now have some brilliant opportunities for a Qld Portfolio Manager. Reporting to the Customer Development Adviser in our Customer Product and Pricing Division, your role is to manage the delivery of the strategic direction of the Qld Motor Portfolio to maximise long term profitability, profit & loss and key business objectives as you strive for bottom line growth, business retention, and observe compliance and regulatory requirements. Specifically you'll be: · Identify and designing strategic initiatives to grow your portfolio · Monitoring direct and allocated expenses as well as annual portfolio budgeting · Assess local market conditions and undertake competitor analyses · Drive the profit and loss of the portfolio · Develop state based portfolio plans, customer needs analysis and product research · Identify and design customer focused product solutions for our mass‑market brands · Understand the impact of the pricing changes on new business, renewals, lapse and cancellation rates … Successful candidates will have a proven, solid background in a similar role with degree qualifications. … [emphasis added] 84 The role description is, in part, in these terms: Role Title: QLD Portfolio Manager Business Unit: Personal Insurance Division: Customer Product and Pricing Department: Motor Portfolio Role Reports to: Executive Manager, Motor Portfolio Direct Reports: Customer Development Advisor, Portfolio Analyst Purpose: · To manage the delivery of the strategic direction for the QLD Motor Portfolio by identify, designing and implementing programs of work which maximum short and long term business objectives. · To promote growth and retain business whilst meeting compliance and regulatory requirements. 85 The role involves 10 key areas of accountability which involves Mr Chan in managing "a team to identify and design strategic initiatives, including product development and growth projects whilst liaising with key business partners across the Group" and ensuring that proposed portfolio projects "have a thorough 'cost benefit analysis' conducted prior to implementation". 86 Mr Chan's contract of employment with Suncorp Metway Staff Pty Limited dated 27 May 2010 provides for a start date of 5 July 2010 in the role as "QLD Motor Portfolio Manager". The position attracts a gross salary of $127,500. Clause 9 of the contract contains restrictions upon the disclosure of confidential information both during and after Mr Chan's employment with the employer and clause 16 sets out the restrictions otherwise imposed upon Mr Chan after his employment ends with Suncorp. 87 As to the resignation events, Mr Chan says that he had a meeting with Mr Edwards on or about 1 June 2010 and handed Mr Edwards a resignation letter. In response to a question of whether Mr Chan had anything lined up, he told Mr Edwards that it was a position "in the commercial space" and that he was "thinking about going back to Optus". Mr Edwards asked Mr Chan what Optus was offering him and Mr Chan said approximately $30,000 more. Mr Edwards said "that's going to be hard to match". There was further general discussion. Mr Chan says that he went to a meeting on 3 June 2010 with Mr Edwards and Mr Lilley. There was a discussion about whether Mr Chan might be interested in a move to a new position within AIH. Mr Chan said he would think about it. 88 Mr Chan says he attended a meeting on 15 June 2010 with Mr Lilley, Mr Edwards and Mr Law. Mr Chan told the AIH representatives that his role is a project role with a marketing focus. He says Mr Lilley asked "Are you sure?". Mr Chan said that he was sure and that "it's got nothing to do with pricing, it's a portfolio role". Mr Chan says Mr Lilley asked him "Why did you tell Ray [Edwards] that you were going to Optus?". Mr Chan says he turned to Mr Edwards and said "I'm sorry for misleading you. I was originally planning on going to Optus but it didn't work out". Mr Chan says Mr Edwards responded "Yeah, it's quite a shock to hear that you weren't going to Optus?". Mr Chan says that Mr Lilley then said "You have a restraint". Mr Lilley pointed to an open folder and said "Did you know you had a restraint?". Mr Chan says that he responded "I knew that I might've had a restraint". Mr Chan says that Mr Lilley asked him "Why did you go for this role when you knew you had this restraint?" and Mr Chan responded "When I signed the document I didn't know". Mr Chan says that Mr Lilley responded "You had ample time to read it. Whose signature's on this document?". Mr Chan said "My Dad's" and Mr Lilley said "Well, that proves you were at home". Mr Chan said "Well, I may have had ample time, but I didn't read it". 89 Mr Chan says further discussion took place during which he asked whether it was possible to stay on with AIH. Mr Chan says that Mr Lilley said "I used to like you and now I'm questioning everything I know about you. I question your ethics, I question your morals". Mr Chan said "Well I don't think that really answers my question" and Mr Lilley responded "Well, I don't know how I can be any clearer". 90 Mr Chan said that he had commitments to meet and a family to support and asked "Well, can we negotiate this? Can I enter a letter restricting what I do? The role is completely different". Mr Lilley said that he would take steps to enforce the contract against Mr Chan. 91 Ultimate findings on all of these questions are a matter for trial. For the purposes of the interlocutory application, it is sufficient to say that I am satisfied that there is a strong prima facie probability of a finding at trial that Mr Chan as an intelligent, educated man with post‑graduate qualifications who exhibits strong analytical skills, read the Employment Contract he signed dated 1 December 2008 and that he read the schedules attached to the contract which consist of nine pages all of which are endorsed prominently at the foot of each page with Mr Chan's signature and the signature of his father as witness. 92 On the material before the Court on the interlocutory application, I am also satisfied that there seems to be some reasonable degree of overlap between features of the role performed by Mr Chan when working in the position of "Risk Pricing Manager" for AIH and the role he performs at Suncorp in his present position. Although plainly there are differences, the role at Suncorp involves strategic aspects directed to the strategic direction of the Qld Motor Portfolio at Suncorp with a view to maximising the long term profitability profit and loss of that portfolio of insurance risk. Mr Chan will be required to design strategic initiatives and to manage the delivery of the strategic direction for the portfolio. 93 I am also satisfied that AIH has a legitimate basis for apprehension of threatened risk of injury having regard to an apparent disregard of the contractual provisions and Mr Chan's contention that he did not read, appreciate or understand the contractual restraints arising out of either the contract of 1 December 2008 or the letter relating to the new position of 2 September 2009 signed by him on 3 September 2009 which by para 3 in five short paragraphs drew his attention expressly to the constraints in the contract and the application of those constraints to the new position. 94 Apart from the matters already mentioned raised by Mr Chan in response to the application for interlocutory relief, Mr Chan raises four other matters. 95 The first is the contended delay on the part of the applicant in commencing proceedings and moving for interlocutory relief. Having regard to the exchanges between the solicitors for the applicant and the solicitors for Mr Chan who apparently are also the solicitors for Suncorp, reflected in the affidavits of Ms Donaghy filed 14 July 2010 and 20 July 2010, I am satisfied that there has been no undue delay in the applicant seeking to have a Court determination of these questions. 96 The second matter concerns the question of whether there is a legitimate basis for apprehension on the part of AIH as to the threatened or contended conduct of Mr Chan in using or disclosing any of the information said in the field of affidavits to comprise the confidential information. Mr Chan says that one thing is perfectly plain in this matter and it is this. Mr Chan has not (and nor is it contended to the contrary) taken with him from his employer any physical or electronic copies of any of the contended confidential information belonging to AIH. He says that other than as may be contained in any of the affidavits filed by or on behalf of AIH, he does not otherwise have in his possession, power or control, any physical or electronic copies of any confidential information belonging to AIH. Moreover, before ceasing his employment with AIH he says that he did not deliberately try to memorise details of any confidential information belonging to AIH so that he could recreate it after ceasing employment with AIH. He says that it follows that he has not improperly used and has never expressed by his conduct any intention to improperly use confidential information obtained by him by reason of his employment with AIH so as to gain an advantage for himself or someone else or cause any detriment to AIH. 97 Further, he says that there is simply no evidence that he has improperly used any confidential information to gain such an advantage or to cause detriment to AIH. 98 He further says that in the absence of any proven actual contravention of a duty, it is not sufficient for AIH to simply allege an apprehension or fear or perceived threat of breach or contravention of the Corporations Act or breach of duty. He says that the apprehension must be grounded in reality. He further says that the actuality of that reality is to be measured by the circumstance that the specification document for the Component Pricing Model involves the analysis and application of 34 factors and a consideration of a body of specific data and information none of which is available to him nor able to be recalled. Mr Chan says that this circumstance differentiates this case from many other cases where a party seeks relief on the basis of either a contravention of the Corporations Act or contended breaches of duty. In most cases, there is evidence that a party has taken some step in manifestation of a contended breach. 99 Mr Chan says that notwithstanding these considerations he has nevertheless made it plain throughout the course of the interchange between his solicitors and the solicitors for AIH that because he has not and has no intention to use, disclose or deal with the contended confidential information, he has been willing to give an undertaking to that effect. In the course of the hearing on 20 July 2010 I asked Mr Chan's counsel whether Mr Chan was willing to give an undertaking to the Court which might accommodate the concerns of the applicant as to the use or disclosure of the confidential information. 100 Mr Chan's counsel volunteered, after my question, a willingness to give an undertaking. The undertaking was framed after the conclusion of the interlocutory hearing and sent to Chambers and the solicitors for AIH. The proposed undertaking is in these terms: I, James Ying Ho Chan of … undertake that, until further order of this Court, I will not by myself, my servants or agents, divulge or make use in any way: (a) Any information relating to or contained in the current pricing model or models used by the Applicant for the pricing of insurance policies and the information relating to or contained in the pricing Model known as the "Component Pricing Model" as developed by the Applicant; and/or (b) Any information within the meaning of the expression "Confidential Information" as that term is defined in item 1.1 of Schedule 2 of the Employment Contract between the Applicant and the Respondent dated 1 December 2008. 101 AIH however expresses concern as to a threatened contravention as Mr Chan has continued to deny that the information has the necessary quality of confidence about it; denies that AIH treated the information as confidential; is not in a position to prove or demonstrate steps that might be taken by Mr Chan when in the role at Suncorp as it is inherently impossible to detect a contravention; protection of the interests of AIH recognised by the clauses in the contract can only occur if the confidential information is recognised and treated as confidential; notwithstanding that Mr Chan does not have copies of documents he has a sufficient body of knowledge based upon the research work he undertook and the intimacy of his engagement in the development of the new model taking account of AIH's existing methodology is such that AIH is at risk of disclosure. Moreover, AIH says it can have no confidence that its position will be protected having regard to Mr Chan's conduct prior to departure which he concedes embodied an untruthful statement as to his plans. 102 These considerations upon which AIH relies bear some relation to the restraint contained in the contract concerning the prohibition upon Mr Chan taking up employment with a competitor of AIH and more particularly Suncorp Metway. So far as the confidential information is concerned, it seems to me that AIH's interests are properly protected by unconditional undertaking in the form proffered by Mr Chan pending trial or until further order of the Court. An order should be made that the form of the undertaking reflected in a formal order is to be served by Mr Chan personally upon Mr James Fitzpatrick, Mr Stephen Jeffries and Ms Natasha Fenech of Suncorp. 103 The question that then arises is whether an interlocutory order ought to be made in aid of final relief sought in respect of the prohibition contained in the contract upon Mr Chan taking up employment with a competitor. 104 As to that matter, the third proposition put by Mr Chan is that the covenant contained in Mr Chan's contract is a covenant in restraint of trade and at common law, a term restricting a person's ability to cover on his trade is prima facie void and unenforceable unless having regard to the particular circumstances of the case, it is demonstrated that the restriction sought is no more than reasonable having regard to the interests of the parties and the public interest. In assessing whether the restraint is justified the Court will have regard to whether the parties bargained on an equal footing. Mr Chan says that he was a relatively young individual although the circumstances of his education and experience are set out more fully in the resume mentioned earlier in these reasons. Mr Chan says however that he did not come to the table on an equal footing and at the time he accepted the role as "Risk Pricing Manager" there was no discussion about restraint clauses. Mr Chan says that the clause contained in Schedule 3 of the contract cross‑referenced to Items 7 and 8 of Schedule 1 is void for uncertainty and is an unreasonable restraint of trade. It is said to be void for uncertainty because it prevents Mr Chan from working in any capacity with a person or entity who is "of a similar nature to or is likely to be a competitor of the business of the Employer" and the term "Employer" is defined to include not only AIH but other companies in the group. Clause 1 of the contract defines "Group" to mean the Employer and any company incorporated in Australia whose shares are owned in whole or in part by Jacamar Overseas Limited, Klinkert Investments Pty Ltd and the Weston Group Pty Ltd and any Related Body Corporate or Associated Entity of the Employer. Mr Chan says it is uncertain who the other companies in the group might be and for this reason the clause is void for uncertainty. 105 Apart from these considerations, the clause is said to be unreasonable as it goes well beyond what is necessary to protect the applicant and extends to the protection of other entities. Thus, it is not simply a clause for the protection of threats to the legitimate interests of the relevant entity. Rather, it is an improper attempt to protect AIH and companies related to AIH from competition. Moreover, Mr Chan says that the restraint goes beyond what is reasonable to protect even AIH's legitimate interests and goes beyond protecting any confidential information of AIH in the model. 106 Further, Mr Chan says that the clause is otherwise unenforceable because it is conditioned upon AIH fulfilling its obligations under the contract which by clause 19.4 required the Employer to pay termination entitlements which were not paid. The date of termination is 2 July 2010 but the applicant in breach of the contract has not paid Mr Chan for the last two weeks of his employment and thus the restraint is unenforceable. Alternatively, the failure to pay amounts due under the contract represents a repudiation of the contract which has been accepted by Mr Chan thus discharging the contract. 107 As to the contract, the obligation of the Court is to seek to construe the contract according to its ordinary language and determine whether it is capable of being given meaning. The contract contains a restraint upon Mr Chan from performing of the kind described in clause 1.3(a) of Schedule 3 which is for the benefit of a person or entity whose business is "of a similar nature to or is or is likely to be a competitor of the business of the Employer" and the scope of the restraint is determined by reference to the item 8 sequential areas for the periods identified in item 7. Clause 1.3 has a broader scope by reference to 1.3(b), (c), (d), (e), (f) and (g). Clause 1.3(c) also links the restraint to the use of confidential information. 108 Clause 1.4 defines a business which is or is likely to be a competitor of the business of the Employer as Suncorp‑Metway Limited. 109 Apart from the combinations comprehended by the clause, the provisions relating to the restraint having regard to clauses 1.6 and 1.7 operate in a way which provides for a sequence of concentric circles of restraint. At its centre is a provision, properly construed, by which Mr Chan is prohibited from taking up employment with Suncorp‑Metway Limited within a period of three months from a date of termination within an area of 15 kilometres radius from the employer's premises at Toowong, Kawana Waters and Northlakes. At the next boundary the prohibition prevents Mr Chan from working for Suncorp for three months within the State of Queensland and ultimately within Australia. As each one of the combinations is examined, the prohibition may be broadened to six months, nine or 12 months within the territorial rings. 110 There may well be arguments at trial concerning whether the formulation of the restraint effects a valid restraint at the outer boundary of the outer circle or closer to the centre. However, I am satisfied that there is a serious question to be tried as to the validity of the contract and, on a prima facie basis, meaning and construction can be attributed to the clauses to identify a precise and narrow field of operation within a period of three months or six months specifically in relation to Suncorp‑Metway Limited or any of its associated entities. 111 A contract is not an option to perform or pay damages. A person might lawfully resile from promise made to another subject to questions of estoppel, change of position, reliance detriments, statutory intervention and other doctrines which attach legal consequences to resiling from a promise. A promise made supported by consideration however is a contractual promise and if the contract is capable of construction and being given meaning it ought to be performed according to its terms. A contractual promise might be void for uncertainty or be unenforceable because it offends against public policy. So far as restraints are concerned, provided the contract can be given a meaning and the restraint is reasonable in terms of protecting the legitimate interests of a person to whom the promise has been made, the restraint ought to be not simply ignored but given voice. 112 In this case, Mr Chan is an educated, intelligent man with an inquiring mind. He was undertaking a position at AIH which attracted a not inconsiderable total gross remuneration which reflects the responsibilities attached to the particular position said, on the evidence, to be an important position giving exposure to the officeholder to important and sensitive information. Mr Chan has left employment and immediately taken up employment in a position which bears some degree of similarity to the features of his earlier role, with Suncorp at a total remuneration of $127,500 with a position description which suggests areas of important strategic responsibility. It seems that Mr Chan either did not read his Contract of Employment or his Letter of Engagement of 2 September 2009 making reference to the restraint or alternatively has elected to ignore the contractual promise and simply take up the new role. 113 The question of Mr Chan's engagement by Suncorp is not simply a function of the restraint but also is relevantly connected with the measure of protection AIH seeks to obtain by seeking to prevent Mr Chan taking up employment with a competitor. Mr Chan's position involves portfolio management and aiding in the strategic direction of the motor portfolio within Suncorp which is the particular area of emphasis engaging Mr Chan in his role with AIH. Moreover, when Mr Chan was interviewed by representatives of Suncorp he was interviewed by officers of that company who are responsible for the Motor Portfolio Personal Insurance area and the Home Portfolio Personal Insurance section of Suncorp and ultimately Natasha Fenech to whom Mr Fitzpatrick reports. 114 In terms of the strength of the prima facie case on this question, although there are legitimate and proper questions to be determined at trial as to the validity and enforceability of the restraint framed in the cascading sequential way which is typical of these contracts, there nevertheless remains a field of operation which is able to be construed from the contract which is directed to protecting, within bounds, the legitimate interests of AIH in respect of the movement of a person from a strategic part of AIH's business to the strategic of a competitor's business in precisely the same field of commercial activity. 115 Accordingly, Mr Chan ought to be restrained by an appropriately framed order which does interim justice between the parties in the exercise of the discretion. 116 I do not propose to restrain Mr Chan from working for Suncorp at all. However, I do propose to restrain him from working for Suncorp within the Motor Portfolio Personal Insurance or Home Portfolio Personal Insurance sections of Suncorp pending the trial of the action having regard to giving effect to the restraint limited to Suncorp and its affiliates for a period of three months. Having regard to Mr Chan's undertaking and the particular order concerning the restraint it may be that Mr Chan is in a position to make arrangements with Suncorp to be engaged in work outside the area of the order. If not it may be that the application ought to be brought back before the Court to determine whether AIH's proposed undertaking to pay Mr Chan the fortnightly income which he was earning under his earlier position, ought to be taken into account in addressing the balance of convenience. 117 The fourth point relied upon by Mr Chan goes to the balance of convenience. I am satisfied that there is a sufficiently strong prima facie case that Mr Chan entered into the arrangements with Suncorp with his eyes wide open as to the contractual promise of a restraint that he had earlier entered into. In that sense, there is a strong prima facie case that Mr Chan is the author of his own problem. Nevertheless, AIH has proffered an undertaking to pay Mr Chan eight weeks of income at the rate he was earning income per week in his role at AIH. That undertaking may not be a necessary part of a resolution of the matter if Mr Chan is in a position to continue in employment with Suncorp in a role consistent with the order. If not, the matter must be brought before the Court on one day's notice in order to vary the orders to incorporate an express undertaking providing financial protection to Mr Chan pending trial. Since the construction given to the prohibition focuses, for present purposes, upon a restraint operating for three months, the exercise of the discretion will be influenced, should the matter come before the Court again quickly in the light of developments as between Suncorp and Mr Chan, by a consideration of whether AIH is willing to provide 12 weeks and not eight weeks of financial support to Mr Chan at the levels of remuneration he previously enjoyed at AIH. 118 Orders will be made for the expedition of the trial and the completion of interlocutory steps. I certify that the preceding one hundred and eighteen (118) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Greenwood.