Supreme Court of WA|2013-10-01|Before: Martin CJ

COMPLETE FIELD MAINTENANCE PTY LTD -v- COULSON [2013] WASC 374 (1 October 2013)

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA

CITATION : COMPLETE FIELD MAINTENANCE PTY LTD -v- COULSON [2013] WASC 374

Injunction - Interlocutory injunction - Restraint of trade - Prime facie case - Balance of convenience - Turns on own facts

(This judgment was delivered extemporaneously on 1 October 2013 and has been edited from the transcript.)

1 The plaintiff, Complete Field Maintenance Pty Ltd (CFM), applies for an interlocutory injunction restraining the defendant Mr Kane Ian Coulson from being engaged with Pilbara Iron Company (Services) Pty Ltd whether on his own account or for and on behalf of any other entity, including but not limited to Pilbara Hire Group Pty Ltd, and also restraining him until further order from interfering directly or indirectly with the relationship between the plaintiff and Pilbara Iron Company (Services) Pty Ltd.

2 The application is made in the course of proceedings that have been commenced by a generally endorsed writ and in respect of which no statement of claim has yet been served. The indorsement of claim alleges that Mr Coulson has breached a contract of employment dated 12 November 2012, whereby CFM employed Mr Coulson as general manager and also foreshadows the claim for injunctive relief which has now been brought before the court.

3 The principles governing applications for interlocutory injunctive relief of this kind are well established. For Australian purposes they were set out conveniently in Beecham Group Ltd v Bristol Laboratories Pty Ltd [1968] HCA 1; (1968) 118 CLR 618 in the following passage from the judgment of Kitto, Taylor, Menzies and Owen JJ where their Honours observed that in applications of this kind, the court addresses two main inquiries:

The first is whether the plaintiff has made out a prima face 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 (622).

[W]hether the inconvenience or injury which the plaintiff would be likely to suffer if an injunction were refused outweighs or is outweighed by the injury which the defendant would suffer if an injunction were granted (623).

5 In Australian Broadcasting Corporation v O'Neill [2006] HCA 46; (2006) 227 CLR 57 after referring to that passage, Gummow and Hayne JJ said:

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. With reference to the first inquiry, the Court continued, in a statement of central importance for this appeal:

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 [65].

6 At [55] [71] of the judgment, Gummow and Hayne JJ referred to authority from other jurisdictions, particularly the United Kingdom. Their Honours observed that those authorities:

[O]bscure the governing consideration that the requisite strength of the probability of ultimate success depends upon the nature of the rights asserted and the practical consequences likely to flow from the interlocutory order sought. The second of these matters, the reference to practical consequences is illustrated by the particular considerations which arise where the grant or refusal of an interlocutory injunction, in effect, would dispose of the action finally in favour of whichever party succeeded on that application [71].

7 For reasons I will develop the last observation in this passage is pertinent to the present circumstances, where some aspects of the relief sought have the character of final relief.

8 The facts upon which the application is brought are identified in the affidavits upon which the plaintiff relies and also by the affidavit upon which the defendant relies in opposition to the application for injunction.

9 Mr Matthew Alan Steele is the sole director and secretary of CFM and has sworn the principal affidavit in support of the application for interlocutory relief.

10 He deposes that the plaintiff carries on a business that services the resources industry in Western Australia by way of the provision of parts and labour hire in relation to mining machinery maintenance services. The business is conducted throughout Western Australia, although primarily servicing the mining industry in the Pilbara region. The plaintiff's largest client is Rio Tinto and Mr Steele asserts that the majority of the plaintiff's services are provided to Rio Tinto's mine site at Paraburdoo, and that over the course of the year, that site constitutes more than 50 per cent of the plaintiff's overall turnover.

11 Mr Steele goes on to depose to the fact that CFM provides its services to Rio Tinto via Rio Tinto Procurement, being the trading name of the company Pilbara Iron Company (Services) Pty Ltd which is one of the companies in respect of which the interlocutory relief is sought.

12 More specifically, Mr Steele deposes to the fact that Mr Coulson commenced employment with CFM on 12 November 2012 and was employed in the senior role of general manager. A copy of the signed employment agreement is attached to Mr Steele's affidavit - I will come to the relevant terms of that agreement in due course. Mr Steele goes on to observe that Mr Coulson was employed by the plaintiff in the capacity of general manager and in that capacity was the plaintiff's most senior employee. Upon Mr Coulson's commencement as general manager, Mr Steele placed him in charge of the entire labour hire/field services division, a role that Mr Steele had previously filled.

13 Following the commencement of Mr Coulson's employment, Mr Steele was able to concentrate more on the administrative side of the business including the warehouse and the supply of parts. Mr Steele goes on to assert that in his role as general manager, Mr Coulson was exposed to all the plaintiff's contractual arrangements, including client lists, market rates, trade secrets, employee details and service contracts, and was also exposed to CFM's network of suppliers, including all costings and margins.

14 Mr Steele deposes that prior to Mr Coulson commencing employment in November 2012, he had already been engaged with CFM on a contractual basis for around four years during which time he had provided services to Rio Tinto on a labour hire basis at the Paraburdoo mine site. Mr Steele asserts that Mr Coulson resigned from his employment on 23 April 2013 giving one month's notice and his final pay including all leave entitlements was paid on 15 May 2013.

15 In early June, Mr Steele was advised by some of his employees that Mr Coulson had been seen at Rio Tinto's mine site in Paraburdoo working immediately alongside CFM's employees who previously had been supervised by Mr Coulson in his role as general manager. Mr Steele was then advised by the general manager of Pilbara Hire Group Pty Ltd that Mr Coulson was employed by that company on a labour hire basis with his services being provided to Rio Tinto in Paraburdoo.

16 Pilbara Hire Group Pty Ltd is the other company in respect of which interlocutory relief is sought and it seems a fair inference that it is a company engaged in the provision of labour hire services in the Pilbara in competition with CFM. Mr Steele goes on to assert that he later discovered, by advice from Rio Tinto, that one of CFM's employees was no longer required at Rio Tinto's Paraburdoo mine site. He believes that that was a direct result of Mr Coulson's engagement with Rio Tinto. That belief is also based on certain information he was given by his employees, although that information is not identified.

17 Mr Steele goes on to observe that another of CFM's employees at the Paraburdoo mine site had been requested to leave site and had been replaced with an employee of Pilbara Hire Group Pty Ltd on the date the affidavit was signed. He also notes that the CFM's contract for the supply of services with Rio Tinto was extended from 24 July 2013 until 31 October 2013.

18 The claim for breach of contract is based principally upon the employment agreement which is an annexed to Mr Steele's affidavit - that is the agreement between CFM and Mr Coulson, dated 12 November 2012. The agreement contains various definitions which it is unnecessary to go to at this stage. It also provides that Mr Coulson's duties and obligations include the duty to faithful and diligently assume and exercise the powers and perform the duties from time to time vested in or assigned to Mr Coulson by CFM including but not limited to the specified duties set out in item 7 of the schedule to the agreement. Item 7 of the schedule to the agreement specifies that the duties are outlined in the attached role description, the position being titled general manager which appears at item 4 in the schedule to the agreement.

19 Annexure B to the agreement sets out the role description of the general manager and provides that the role is to report directly to the managing director, Mr Steele, and specifies the duties to be performed in these terms:

With accountability for all aspects of the business, the General Manager will ensure that both the day-to-day operations (office and site) and strategic business runs smoothly and in accordance with company guidelines and policies.

This role will have a clear focus on current and potential projects with an emphasis on delivering desired outcomes and working closely with existing customers and identifying further business opportunities. You will oversee strategic development and all aspects of project delivery, reporting, safety and profitability.

20 Those words confirm Mr Steele's observation that this was a senior position with the company - indeed, the most senior position, reporting directly to him in his capacity as managing director.

21 Clause 9 of the employment agreement contains provisions with respect to the confidentiality of information gained by Mr Coulson in the course of his employment. Although suggestions were made in the written submissions filed in support of the application to the effect that there was evidence suggesting breach of this clause, that proposition is no longer advanced. Clause 9 is only relied upon as providing a justification for the restraint provisions which are found in cl 14 of the agreement and upon which this application is based.

The Employee covenants and agrees with the Employer that the Employee will not (except with the prior written consent of the Employer), either directly or indirectly in any capacity (including without limitation as owner, part owner, partner, joint venturer or franchisee, licensee, member, shareholder, unit holder, director, manager, employee, consultant, advisor, contractor, principal, agent, trustee, beneficiary, associate or financier):

(a) during each of the restraint periods referred to in clause 14.2; and

(b) within each of the restraint areas referred to in clause 14.3,

on the Employee's own account or for or on behalf of any other person:

(c) accept any engagement, appointment or contract directly with any Client or Supplier, to provide goods or services for any Client of the nature supplied by the Employer to the Client at any time during the Employment.

23 There are other constraints provided by the clause, and although CFM's written submissions suggested that other aspects of the constraint clause may have been relied upon in the application for relief, they are not pursued. Those other constraints concern the solicitation or canvassing of employees away from the employment of CFM.

24 Clause 14 is structured in such a way as to provide differing categories of restraint period, and different categories of geographical operation. The different categories are specified in cl 14.2 and cl 14.3 respectively. The differing times of constraint upon which the plaintiff relies for the purpose of this application are the period of 12 months from the date of termination of employment. In terms of the area of the restraint, the area relied upon by the plaintiff is the Pilbara region of Western Australia, consisting of the Shires of Ashburton, Roebourne, and East Pilbara, and the Town of Port Hedland. For that reason, it is unnecessary to refer to the other prospective periods of restraint or other geographical areas of restraint specified in cl 14.

25 The clause goes on to provide that the restraint has effect as several separate and independent covenants and restraints, consisting of each separate covenant and restraint set out in cl 14.1 combined with each separate period of time set out in cl 14.2 and each such separate combination combined with each such separate area set out in cl 14.3. The purpose of this structure is apparent from cl 14.5 which provides that:

If any of the covenants referred to in clause 14.4 is or shall become unenforceable, that does not affect the validity and enforceability of the other covenants which will remain binding on the Employee.

26 In other words, the clause is, as is not uncommon, structured in such a way that if the court considers that in parts of its provisions exceed that which is reasonable, narrower operations both in time and geographical area in respect of that clause may survive and nevertheless be valid. Clause 14.6 goes on to contain a number of acknowledgements on the part of Mr Coulson as to the purposes for which the restraint has been imposed and, in particular, an acknowledgement that the constraint is fair and reasonable in regard to the subject matter, activity area and duration of the restraint. However, given the variable operation of the area and duration of the restraint, it is difficult to give much weight to that acknowledgement.

27 Clause 14 is the critical provision upon which the current application is based and it will be necessary to come back to that provision in due course.

28 Mr Coulson has filed an affidavit in opposition to the application. In that affidavit he deposes to the fact that he is a fitter machinist by trade. He has known Mr Steele for more than 15 years and worked with him in a variety of capacities. After Mr Steele established the CFM business, Mr Coulson initially provided services from a business based in Tasmania and then, in October 2011, relocated from Tasmania to Perth and thereafter, provided services under contract to CFM, those services being primarily relating to what is called 'regular scheduled maintenance' of drills during a 'shut' - which is a seven to 14 day period in which drills were taken out of field service for maintenance and parts renewal.

29 Mr Coulson deposes that his role informally evolved so that he was not simply managing services on one site but was generally managing operations over all sites with the result that he and Mr Steele agreed that his role was more that of a general manager, and that it was appropriate for him to be employed in his personal capacity as general manager rather than as a contractor. The contract of employment was prepared for him to sign.

30 Mr Coulson has seen the contract used in other contexts. It is a standard form template and it was a contract used by him when he engaged new staff. Mr Coulson more fully describes the business carried on by CFM and, in particular, observes that it was:

[T]he supply of specialised technical labour for field service of drill rigs. It also supplied parts for drills as an incidental to the main activity of drill rig service. CFM supplied parts for Terex drills and Cubex drills, as well as hydraulics for Atlas and Sandvik drills. CFM had the ability to supply parts for other machinery but 99 per cent of the parts supply business was drill parts.

Occasionally CFM also supplied general labour hire (workshop staff as opposed to drill specialists) to its clients but this was ad hoc. In relation to general labour hire, there were several other labour hire businesses operating on the sites including Skilled, Elphinstone Mechanical, Sandvik, Westrac Caterpillar, Pilbara Hire and others.

32 He also deposes to the fact that his understanding is that:

Pilbara Hire is Rio Tinto's preferred supplier for workshop staff at Paraburdoo.

33 Mr Coulson describes his role as general manager for CFM and, in particular, the fact that he was based at the office of CFM in Canning Vale, a suburb of Perth, and was responsible for about 50 casual and full-time employees of CFM who worked at Canning Vale and on site in the Pilbara.

34 In his capacity as general manager he was responsible for the recruitment, internal performance reviews and discipline of those staff involved in field services. He liaised with the clients, including Rio Tinto and BHP, conducted weekly management meetings at head office with staff, attended site regularly to oversee employee performance and coordinated and developed occupational health and safety policies and procedures - all of those duties and responsibilities being entirely consistent with what one would expect of the role of general manager.

35 Mr Coulson disputes Mr Steele's assertion that as at April 2013 50% of the plaintiff's turnover was from Rio Tinto's site at Paraburdoo but nothing much appears to me to turn on that issue. He refers to his access to CFMs confidential information in terms which it is unnecessary to detail. It is sufficient for present purposes to note that Mr Coulson emphatically denies any misuse of that information and denies any engagement in any decisions with respect to the employment or termination of employment of anybody working at the Rio Tinto site at Paraburdoo subsequent to the termination of his employment with CFM.

36 The circumstances of the termination of that employment are described by Mr Coulson. He says that his relationship with Mr Steele deteriorated following his separation from his wife who was a close friend of Mr Steele's wife. As a result, he handed in his notice and was unemployed between 23 April 2013 until 21 June 2013, although I think that assertion must be read subject to the fact that he gave a month's notice on 23 April and was therefore almost certainly employed up until some time in May, albeit not actually providing services.

37 Mr Steele says that he discussed with several friends the fact that he was looking for work and, as a result, became aware that there was a position available in the workshop at Rio Tinto's Paraburdoo site. He was told that a permanent Rio Tinto employee had resigned and so the position was vacant. The position was for a heavy diesel fitter in the workshop - that is, it was for general equipment servicing rather than field drill servicing. He did not think that taking up the employment would be a breach of his contract because it was not a field position but a workshop position.

38 He was then contacted by the site supervisor at Rio Tinto, a Mr Johnson, who confirmed that the position was about to become vacant because a Rio Tinto employee had relocated elsewhere within the company and then, within a day or so, the service manager from Pilbara Hire Group Pty Ltd contacted him and he was offered the position. There was no discussion about rates. When he asked the person from Pilbara Hire what his rate would be he was told the rate and there was no negotiation of that rate.

39 Mr Coulson has described his present duties as a heavy diesel fitter in the Rio Tinto workshop, albeit on placement by Pilbara Hire. He says that he is involved in the servicing of equipment, including excavators, backhoes, float trucks and drills in the workshop, oil changes and filter changes and running checks. He carries out backlog repairs and scheduled work and is required to raise notification of any faults found during servicing and to wash and clean machines and vehicles. He records his times against jobs and reports to the workshop supervisor.

40 He is one of about 10 people on his shift and crew working in a similar role. On his crew when he started there were at least six employees who worked directly for Rio Tinto, a Pilbara Hire employee, a Skilled employee and two employees who were subcontracted through CFM - Pilbara Hire, Skilled and CFM all being labour hire companies. Mr Coulson goes on to observe that the two CFM employees on the crew were hired by him when he worked for CFM but he did not supervise them.

41 In response to Mr Steele's assertion that he had filled a position held by a CFM employee, Mr Coulson assumes that the person referred to is a Mr Cross who was employed on shift 1 in the workshop. He understood that Mr Cross had worked three swings and finished one swing before he started and then left because he was chasing overseas work. Mr Steele's affidavit in reply challenges that proposition but, at all events, nothing seems to turn upon it because there is no evidence that would sustain the conclusion that Mr Coulson had anything to do with Mr Cross's departure.

42 Mr Coulson does, however, accept that the work done by Mr Cross is similar to the work that he is presently performing. As I mentioned, Mr Coulson emphatically denies any involvement in any discussions with Rio Tinto about anybody else's employment at the Paraburdoo mine site and asserts that he has had no discussion about CFM's hire rates, CFM's business or the development of Pilbara Hire's business and he has had no discussions with anybody about CFM's employees.

43 Mr Steele has provided a short affidavit in reply in which he challenges some of the factual assertions made by Mr Coulson but, in my view, nothing turns upon these for the purposes of this application. Mr Steele confirms in his affidavit in reply that in Mr Coulson's role as general manager he was in charge of the plaintiff's entire labour hire/field services division and supervised all the plaintiff's staff on site, including those referred to in Mr Coulson's affidavit. Mr Steele asserts that Mr Coulson was involved in negotiations about pricing structures and had knowledge of current and site specific rates. As I have noted, Mr Steele challenges the assertion made by Mr Coulson with respect to Mr Cross.

44 In summary, it is clear that some matters of significance emerged from this evidence. Firstly, the role in which Mr Coulson was engaged as general manager is very different indeed from the role in which he is currently engaged as a heavy diesel fitter in the workshop at Rio Tinto's site at Paraburdoo. In that latter capacity, there is no suggestion nor any evidence to sustain the proposition that he has had any opportunity to utilise sensitive or confidential information with which he was provided as general manager. Nor is there any evidence that would sustain the conclusion that he has disclosed that information to anybody or that he has participated in any decisions or negotiations with respect to the termination of staff or the hiring of staff at the Rio Tinto site at Paraburdoo.

45 That observation reinforces the fact that his current role is very different to the role in which he was engaged as general manager. In his capacity as general manager of CFM he was responsible for and negotiated with clients with respect to the provision of labour and arranged for labour to be placed on site. His current role is concerned with the maintenance and repair of heavy machinery.

46 The other point which emerges from this review of the affidavit material is that, if relief was granted in the terms sought, it would have the character of final relief, at least in respect of Mr Coulson's employment by Pilbara Hire and with any Rio Tinto or any Rio Tinto related company in the Pilbara. It is possible that there may be other opportunities for employment available to Mr Coulson but the effect of the relief would be to terminate Mr Coulson's current employment. Having regard to the limited judicial resources available to the court, there is no prospect that this case could be finally tried and determined prior to the expiry of the restraint clause which will be in either April or May of next year, depending on when one counts Mr Coulson's termination of employment as commencing.

47 Returning then to the employment agreement and the restraint clause (cl 14), as I have mentioned, the plaintiff no longer places any reliance upon any suggestion to the effect that Mr Coulson has breached the clause relating to misuse of confidential information or the provisions of the restraint clause relating to the solicitation of employees, and so those possibilities can be put to one side. It is also pertinent to observe that there is no evidence in the affidavit material of any irreparable harm flowing to the plaintiff from the breach of cl 14.1(c) which is said to sustain the application for interlocutory relief.

48 Despite the innuendo emerging from Mr Steele's affidavit there is simply no evidence upon which I can rely for the purposes of these proceedings to the effect that Mr Coulson has disclosed confidential information or has used any of the information that he has had at his disposal in any respect whatever since the termination of his employment. There is simply no evidence that he has been involved in any way whatsoever in relation to the engagement or termination of any other employees at the Pilbara mine site operated by Rio Tinto.

49 It follows that the only evidence of possible breach that is open on the evidence as it presently stands is breach by taking up employment as a heavy diesel fitter as an employee of Pilbara Hire on placement at Rio Tinto's mine site. It would seem to follow that the maximum amount of damage potentially suffered by CFM in the event that it makes good its claim for breach is the profit that it would have derived if it had been in a position to provide that employee, rather than Pilbara Hire, in a situation in which CFM was competitive with a number of other labour hire companies in the marketplace for the provision of labour hire to mining companies in the Pilbara.

50 It seems that the restraint clause (cl 14) may run until May of 2014. Mr Coulson commenced duties with Rio Tinto in June of 2013. It would therefore, seem that CFM's maximum damages are the profit that might have been derived from the provision to Rio of an employee providing the services now provided by Mr Coulson for a period of 11 months, discounted by the possibility that CFM may not have in fact won the work to provide that employee in a competitive market environment.

51 The important point to note from this observation is that those damages are readily calculable and there would not appear to be any difficulty in performing those calculations. Nor can it be said that the damage to CFM is irreparable or that on the evidence, the business of the CFM is under any great jeopardy.

52 By contrast, as I have already observed, if the relief sought is granted it would effectively be final relief, at least with respect to Mr Coulson's current employment and any future employment with either Pilbara Hire or Rio Tinto. Going back to the principles enunciated in Beecham Group and explained in ABC v O'Neill, this has a very material bearing on the strength of the arguable case that would be required to sustain the relief sought. The consequences for Mr Coulson would obviously be more profound in the event that injunctive relief is granted, than for CFM in the event injunctive relief is refused having regard to the fact that damages would appear to be an adequate remedy and would be readily calculable.

53 It is therefore necessary to ask whether the plaintiff has made out a case of sufficient strength to justify relief which would have those consequences. Because the claim is brought in respect of an alleged breach of a clause that is in restraint of trade, there are two questions that must be addressed. The first is the construction and operation of the clause and, secondly, whether the clause is, in fact, enforceable at all having regard to the principles of common law that govern the enforceability of clauses of that character.

54 Dealing first with the question of construction, there are, I think, two issues that give rise to a serious doubt as to the strength of the plaintiff's case. The first issue is precisely what are the services that are the subject of cl 14.1(c) in respect of this particular employee, that is, the general manager. Clause 14.1(c) precludes the provision of goods or services for any client of CFM of the nature supplied by the employer to the client at any time during the employment.

55 So the question is what is the nature of the services provided by CFM to the client? On one view, the services provided to the client, for example Rio Tinto, are the services provided by a labour hire company - that is, the filling of requests for the provision of employees, and the provision of employees to fill gaps in the workforce of Rio Tinto as and when those gaps emerge. That is a view of the clause that would most appropriately correspond to the role of Mr Coulson as general manager because that is what he did - that is what his responsibilities were - namely, the provision of a variety of forms of labour at different times and different places performing different services pursuant to rates to be agreed between CFM and Rio Tinto.

56 If that is what the term 'services' mean in cl 14.1(c), that is not a service that Mr Coulson is presently providing, either to Pilbara Hire or to Rio Tinto. The service he is presently providing is that of heavy diesel fitter in Rio Tinto's workshop at Paraburdoo. If that issue of construction is resolved as I have suggested it might be, then CFM's claim would fail.

57 On the other hand, if goods or services are construed as being the services of the kind that are provided pursuant to the labour hire arrangements, that is the workshop labour or the specialist drill mechanic labour out on site, then there is a serious question about the enforceability of that clause having regard to the nature of the services provided by Mr Coulson as general manager.

58 Putting that more succinctly, if the services to which cl 14.1(c) applies include the services of a heavy diesel fitter, then they are very different in character to the services which Mr Coulson was providing as general manager. That must give rise to a very serious question about whether that restraint is reasonably directed to the protection of the legitimate interests of CFM.

59 There is a second construction question and that concerns the prohibition upon the acceptance of any engagement, appointment or contract 'directly' with any client or supplier. The word 'directly' obviously relates to the phrase 'engagement, appointment or contract' and that must be with the client. Pilbara Hire was not a client of CFM; Rio Tinto was CFM's client through Pilbara Iron Services. The question then is whether Mr Coulson has directly accepted an engagement, appointment or contract with Rio Tinto.

60 It seems to me to be at least cogently arguable that Mr Coulson has not directly accepted such an engagement because it was not him that negotiated the arrangement between Rio Tinto and Pilbara Hire. Mr Coulson accepted an engagement with Pilbara Hire. It was Pilbara Hire who negotiated the arrangement with Rio Tinto. Mr Coulson did not act on behalf of Pilbara Hire in concluding an arrangement with Rio Tinto. Therefore, it seems reasonably arguable that Mr Coulson has not, in fact, breached the clause because it was not him that entered into the arrangement.

61 In the context of an employment contract for a general manager, that construction - that is, that there be a requirement that the employee not contract directly with a client - would make sense by reference to the protection of legitimate interests of CFM, because, of course, that is precisely what Mr Coulson did as general manager. On behalf of CFM he negotiated and entered into arrangements with CFM's clients. So one could well understand a clause being directed at services of that kind. But that is not what Mr Coulson has done; Mr Coulson is in a workshop repairing and maintaining heavy duty machinery, not engaging or providing staff.

62 So there are at least two construction questions that give rise to a serious doubt as to whether CFM will ultimately be successful at trial.

63 In addition, there are serious questions with respect to the enforceability of the clause having regard to the requirement that it be reasonably adapted to the protection of the legitimate interests of CFM as a result of its employment relationship with Mr Coulson.

64 The first I have already mentioned, that is, the scope of the services prohibited by the clause. In order to make good the proposition that Mr Coulson has been in breach of cl 14, the plaintiff would have to establish that a clause which restrained him from providing services of a very different character to the services he was performing as a general manager, was justified in the protection of its interests. There must be a serious question as to CFM's capacity to discharge that burden.

65 There are also questions with respect to the width of the clause. The clause restrains engagement with any client of CFM, whatever the nature of the relationship between Mr Coulson and the client, whether he had had anything to do with that client or not, and any supplier - that is any supplier of goods or services to CFM, again, whether or not Mr Coulson has any relationship whatever with that supplier of goods or services. There are real questions about whether a clause of that breadth would satisfy the requirement of reasonableness.

66 As such, there are a number of issues that imperil the success of the plaintiff's case. The question then is whether, in that context, the plaintiff has made out a case which is sufficiently arguable to justify relief which would have the character of final relief, at least in some respects, in a context in which the damages available to the plaintiff in the event that it does succeed in its case would appear to be readily calculable and not enormous, and there is no question of threat to the ongoing nature or quality of the plaintiff's business.

67 It seems to me, in those circumstances, the plaintiff has not made out a sufficiently arguable case; that is a case with sufficient strength to justify the relief sought and the application will be refused for those reasons.

COMPLETE FIELD MAINTENANCE PTY LTD -v- COULSON [2013] WASC 374 (1 October 2013)

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COMPLETE FIELD MAINTENANCE PTY LTD -v- COULSON [2013] WASC 374 (1 October 2013)

Cases Cited (2)