DP World Sydney Ltd v Guy

Commencement date of clause 19.1 restraint

1. I turn to the first issue, from when does the restraint in cl 19.4 begin to run. Mr Guy's argument that the restraint in cl 19.4 commenced to run on 28 April and expired on 28 July 2016 depended on two propositions. First, that the employment relationship between the parties ended when he was placed on gardening leave. Secondly, that cl 19.1 operates from the time the employment relationship, as distinct from the contract of employment, ended.
2. As to the first limb of the argument, I do not accept that the result of DPW's decision to invoke cl 17.4(a) and to put Mr Guy on gardening leave was to terminate the employment relationship. The principle that the employment relationship may be terminated, although the contract of employment has not been discharged, is essentially based on the fact that equity will not decree specific performance of a contract of service and that at common law, subject to the express terms of the contract, wages are due only for the performance of work, so that if the employee is wrongly dismissed, he or she cannot sue for wages even though he or she stands ready and willing to provide his or her service (Automatic Fire Sprinklers Pty Ltd v Watson [1946] HCA 25; (1946) 72 CLR 435 at 450-452, 465-466; Byrne v Australian Airlines Ltd (1995) 185 CLR 410, 427-428). In Tullet Prebon (Australia) Pty Ltd v Purcell [2008] NSWSC 852; (2008) 175 IR 414 Brereton J said (at [30]) that notice of termination not given in accordance with the contract of employment is ineffective to terminate the contract, unless it is accepted, but that the relationship of employer and employee is ordinarily at an end because it is inconsistent with the confidential nature of the relationship that it should continue against the will of one of the parties.
3. In Automatic Fire Sprinklers Pty Ltd v Watson, Dixon J said (at 466): "Some difficulty has been felt in saying what is the service which carries wages. The wages are incident to the subsisting relationship of master and servant. A master who sends his servant upon a holiday upon full pay can be sued for wages under the contract, although not on a common count for work and labour done. They also serve who only stand and wait. Difficulties, too, arise from the fact that a refusal to work on the part of a servant, who neither leaves his master's service nor is discharged, may disentitle him to wages for the period of the refusal. That is for non-fulfilment of the conditions by which wages are earned. But, broadly speaking, it is enough to say that wages are for the service reasonably demanded under a subsisting relationship of master and servant. That relationship may be ended by the servant forsaking the master or the master discharging the servant, although the act of one or of the other amounts to a breach of contract."
4. In Tullett Prebon (Australia) Pty Ltd v Purcell the employee gave immediate notice of resignation of a fixed term contract of employment. His unilateral resignation was a repudiation of the contract that was not accepted by the employer who immediately put the employee on gardening leave. It was the employee's unilateral repudiation of the contract that terminated the employment relationship, although the contract remained on foot. (See paras [23] and [28]-[29]).
5. In the present case, neither party repudiated the contract of employment. Mr Guy gave three months' notice of termination in accordance with cl 17.1(a). DPW invoked cl 17.4 and advised Mr Guy that he was not required to attend the office for performance duties unless directed to do so by Mr Kruse, but was to remain contactable and available for work by the company telephone if required. Mr Guy acknowledged that he would so remain contactable and available for work. To use Dixon J's expression in Automatic Fast Sprinklers v Watson, Mr Guy was one who served although he only stood and waited. Had his wages not been paid, he could have sued for them. As neither party repudiated the contract and both parties accepted that the contract remained on foot and that the employer had rights under cl 17.4 and the employee remained subject to obligations under cl 17.4, in my view, the employment relationship did not come to an end.
6. Accordingly, the restraint period under cl 19.1 did not commence until 29 July 2016 on the termination of both the employment relationship and the contract of employment.
7. The validity of the restraint period must take account of the fact that it might apply after the employer had invoked a three-month period of gardening leave, with the result that if the restraint is valid, Mr Guy could be kept out of employment with a competitor for six months. However, that is a different question from the issue of construction with which I am presently concerned.
8. Even had I accepted the first limb of Mr Guy's argument that his employment with DPW terminated on 28 April, I would not have accepted his argument that, in cl 19.1, the restraint period would commence from that day.
9. Clause 17 sets out the circumstances in which the parties agreed, for the purposes of their contract, that Mr Guy's employment could be terminated. Those circumstances did not include any unaccepted unilateral repudiation of the contract by either party. While such an unaccepted unilateral repudiation would be effective to terminate the employment relationship, it does not follow that that is what the parties are to be taken to have had in mind when giving meaning to the words "termination of your employment" in the definition of Restraint Period.
10. On the construction advanced for Mr Guy, he could have advanced the commencement of the Restraint Period by repudiating the contract instead of giving notice in compliance with it. That is an unreasonable outcome that does not give the contract a commercially sensible operation. It is not the preferable construction.
11. It may be that a different meaning would be given to the references in cl 18 to the termination of employment. Clause 18 refers to the employee's employment being terminated "for any reason"; words which are not found in the definition of the Restraint Period. Having regard to the different purpose served by cl 18 and the additional words in cl 18, it is arguable that cl 18 would operate from the time the employment relationship is terminated. But that does not mean that cl 19 should be so construed.
12. For these reasons, I reject Mr Guy's submission that the restraints in cl 19 expired on 28 July 2016.

Validity of restraint

1. I turn to the second issue as to the validity of the restraint.
2. This is an application for an interlocutory injunction. The decision whether to grant or refuse the interlocutory injunction may, in a practical sense, determine the substance of the matter. The restraint only runs until 28 October 2016, and it may not be possible for the matter to be determined on a final basis before then. In any event, time will be running.
3. In such a case, it is necessary to evaluate the strength of the plaintiff's case to determine where the balance of the risk of doing an injustice lies (Kolback Securities Limited v Epoch Mining NL (1987) 8 NSWLR 533 at 536).
4. The validity of the restraint is to be assessed as at the time the contract of employment was entered into and is to be assessed by reference to what the restraint entitled, or required the parties to do, rather than what they have actually done, or intended to do (Woolworths Ltd v Olson [2004] NSWCA 372 at [40]).
5. If the case for the exercise of the discretion to grant injunctive relief arises, the Court will take into account matters as they exist at the time of the hearing (Otis Elevator Company Pty Ltd v Nolan [2007] NSWSC 593 at [17]-[30]).
6. In Tullett Prebon Australia Pty Ltd v Purcell, Brereton J summarised the law as follows (at [47]): "In New South Wales, a restraint of trade is valid to the extent that it is not against public policy [Restraints of Trade Act 1976 (NSW), s 4(1); Koops Martin Financial Services Pty Ltd v Reeves [2006] NSWSC 449 at [26]-[27]]. A restraint of trade is not contrary to public policy if it is reasonable as between the parties, and not unreasonable in the public interest, so that while affording adequate protection to the party in whose favour it is imposed, it is not injurious to the public [Nordenfelt v Maxim Nordenfelt Guns & Ammunition Co Ltd [1894] AC 535 at 565; Herbert Morris Ltd v Saxelby [1916] 1 AC 688 at 706-707; Lindner v Murdock's Garage (1950) 83 CLR 628 at 653]. Whether a restraint is reasonable having regard to the interests of the parties depends on two, albeit related, considerations: first, whether the covenantee has a legitimate protectable interest, and secondly, whether the restraint is no more than resasonable for the legitimate protection of that interest. A covenantee is not entitled to be protected against mere competition; the legitimate interests which may be the subject of protection by covenant are in the nature of proprietary subject matter [Vandervell Products v McLeod [1957] RPC 185; Tank Lining Corp v Dunlop Industries Ltd (1982) 40 OR (2d) 219; 140 DLR (3d) 659 at 664], including trade secrets and confidential information, and goodwill including customer connection."
7. Although an employer is not entitled to protection from competition, a restraint for a limited period against a former employee working for a competitor may be justified on the grounds that such a restraint is necessary to protect trade secrets, or confidential information. This is because of the difficulty of proving a breach of an obligation not to disclose or use such confidential information (The Littlewoods Organisations Ltd v Harris [1978] 1 All ER 1026 at 1033 and 1038; Kone Elevators Pty Ltd v McNay (1997) ATPR 41-564; Woolworths Ltd v Olson at [67]).
8. The contract with DPW provided for Mr Guy to be appointed as General Manager (Operations) of the Port Botany Terminal, or such other comparable position as might be determined by DPW. It provided that he would report to the Chief Operations Officer. His initial base salary was $200,000 per annum, plus a minimum superannuation payment of $19,000 per annum and a vehicle allowance of $25,150 per annum. He was eligible to participate in the staff bonus scheme. He held a senior position.
9. DPW is a related company of DP World Australia Pty Ltd. That is a port and supply chain operator with terminals in Port Botany, Sydney, Brisbane, Melbourne and Fremantle. The terminals are directly run by related companies of DP World Australia. DPW is responsible for the operation of the Port Botany Terminal. It provides stevedoring services described by Mr Guy as follows. "17 As a terminal operator, DP World, like other terminal operators, provides services to customers. Customers are principally shipping lines but include road or rail transport operators. Customers do not necessarily deal with any particular terminal operator on an exclusive basis. On the contrary, it is not uncommon for customers to have contracts with more than one terminal operator in respect of their operations. 18 DP World leases the Terminal yard and quay line from NSW Ports. 19 Containers and other goods received at the Terminal for transport by ship, arrive at the Terminal either by road (transported by trucks), or rail. 20 Containers and other goods which have arrived by ship, are then generally transported to other sites by road or rail. In some instances, containers or goods may be loaded on to another ship for transport to other locations. 21 After arrival at the Terminal by land or sea, and after they have been unloaded, containers are stored at the Terminal, before being loaded onto either ships, road or rail transport. 22 The Terminal comprises: 936 metres of quay line at which incoming and outgoing ships dock; yard space used to store containers and other goods unloaded from ships or unloaded from road or rail transport prior to being loaded onto ships; discrete points at which trains and trucks are unloaded or loaded; and office and maintenance facilities. 23 Depending upon factors such as the size of ships and the bollard configuration on the quay, there is capacity to dock between two and three ships at any one time at the Terminal. 24 In addition, DP World owns and operates machinery at the Terminal. That machinery includes: quay cranes; Internal Terminal Vehicles (ITVs); rubber tyre gantries; forklifts; and reach stackers. The Terminal does not use automated machinery. 25 Quay cranes (which move only on fixed rail lines), are used to load and unload containers and other goods to or from ships at the quay line. 26 ITVs are trucks and trailers used to move containers between the yard and the quay line. 27 Rubber tyre gantries (RTGs), forklifts, and reach stackers are used to transport containers and other goods around the Terminal, and to load and unload containers and other goods to or from trucks and trains. 28 DP World has approximately 700 employees working at the Terminal. 29 There are two other stevedoring operators with terminals at Port Botany - Patrick and Hutchison Port Holdings Limited (Hutchison). 30 While I have been employed by DP World as General Manager Operations, DP World has handled the majority of containers and goods being transported to and from Port Botany. After DP World, Patrick has the greatest market share for the transport of containers and goods to and from Port Botany. Hutchison has less than 10 percent of the market. 31 DP World's operations at the Terminal are not automated (essentially, the machines are run by stevedores, not by computer). In contrast, Patrick's Autostrad Terminal at Port Botany (Patrick Autostrad Terminal), is automated (yard machinery is run by computer and is driverless). The work performed by RTGs and forklifts at DP World, is performed by unmanned straddles at the Patrick Autostrad Terminal. 32 DP World handles hundreds of thousands of containers at the Terminal each year."
10. Mr Guy described his role as follows. "33 In my current role at DP World, I performed various duties and responsibilities relating to the management of the Terminal. 34 Among other things, I was: responsible for leading the operations aspect of DP World's business at the Terminal, to meet agreed operational key performance indicators (KPIs); involved in the process of setting budgets with the Chief Operating Officer; responsible for achieving operational KPIs such as: gross moves per hour for cranes across the quay line; labour cost per container (box); berth moves (the total crane moves per vessel) per hour; shift crane rate, window schedule integrity and truck turnaround time as well as safety indicators such as lost time injury rates, medical treated injury rates and first aid injury rates; responsible for setting with the Chief Operating Officer and reviewing, KPIs against a budget calculated by reference to containers, gang size, and labour. I had operational, safety, labour, and cost controls, which were agreed and which I compared to last year's performance; responsible for identifying and implementing road strategies, rail strategies, yard strategies, and safety strategies to improve productivity at the Terminal; and responsible for identifying particular projects to provide budgetary improvements, including developing strategies to achieve a certain cost per box. 35 I reported to the Chief Operating Officer: on the performance of the Terminal at DP World Board meetings; and for the management of staff and the delegation to others of responsibilities, including dealing with industrial matters, as required."
11. DPW's client are generally shipping lines and cargo owners. The fees for tariffs vary from client to client and depend upon a range of factors, which DPW keeps confidential. These include for each client the volume of cargo, the nature of the cargo, what rebates are in place, what incentives are negotiated for efficiency and DPW's costs.
12. The charges are negotiated with each individual client. They are kept confidential.
13. Mr Kruse deposed: "22 … The costs of the business include, but are not limited to, labour; costs of the acquisition, establishment and maintenance of equipment (for example, cranes); and costs of infrastructure (port-side rail and utilities), and, importantly, the cost of rental paid to the owner of the port facilities. Findings means to reduce costs or to make operations more efficient is critical to competition in the industry. Knowledge of a competitor's actual costs and the means of reducing costs would give DP World a competitive advantage in negotiations with a new or existing client. 23 As deposed to above, other areas of competition include efficiency, the type of service and its quality. If one of the port operators can offer a more efficient and timely service in the loading/unloading of cargo, turnaround of ship or streamlined storage, that will provide it with a distinct advantage in securing or retaining clients. The business operations of port operators are complex, with numerous simultaneous processes involving both human and engineering resources that must be handled in the most timely and cost efficient manner. Where the desired level of efficiency is not maintained there can be delays in the loading/unloading and movement of goods and a consequent prolongation of ships staying at port. This can lead to port operators suffering increased costs and penalties or the abatement of fees under the terms of the agreements with clients. 24 DP World applies a series of statistical measures and assessments to track costs and efficiency. This data is used to form targets which it is the responsibility of the leadership of DP World to achieve and which also impact on the price and services offered to clients."
14. Mr Guy described his role as an inwards looking role, focusing on the efficiency of the operation of the terminal, rather than as an outward looking role of facing the customers. Nonetheless, he had dealings with five shipping lines and two suppliers of equipment.
15. From time to time, he received copies of customer contracts, so that he understood the penalty provisions and, I assume, also, the incentive provisions, so as to keep as efficient an operation as possible according, as he put it, to contractual expectations.
16. Mr Kruse deposed that Mr Guy was provided with the following kinds of information. "(a) The elements of the Plaintiff's costs base in operating the Port Botany terminal, the actual quantum of those costs and how that compared with the budget. (b) The statistical measures used to track throughput and efficiency at the Port Botany terminal and how the actual performance compared with the budget. (c) The contracts with clients, including the performance standard required of the Plaintiff, the revenue generated under the contracts and when the contracts would expire. (d) Strategies for obtaining new contracts, including an understanding of the content of proposals made to current and potential clients. (e) Problems in meeting performance standards under the contracts with clients. (f) The terms of rental arrangements between the Plaintiff and the owner of the port, NSW Ports. (g) The value of the revenue to be derived by DP World from contracts with its clients. (h) Development and expansion plans. (i) Productivity and performance, including future projections and targets. (j) Plans to expand automation to the Port Botany terminal. (k) Exclusive product offerings, including 1-Stop. (l) Investment plans and in particular plans for the acquisition and bringing online of new equipment."
17. In response, Mr Guy said, in substance, that he had no independent recollection of the details of those matters, such as the actual quantum of costs, or the detail of the statistical measures used to track through port, or the details of actual performance of actual budgets, or the detail of the performance standards required under individual contracts.
18. He deposed that while he had some knowledge of DPW's development and expansion plans for the terminal. He understood that DPW's new General Manager was reviewing those plans. He said he had some knowledge of future projections and targets, but said that the data used for setting targets changed daily and lost currency rapidly.
19. Mr Guy was appointed as a director of DPW on 5 February 2015. The employment contract did not provide for his taking up such a role and his additional seniority as a director of DPW is not a matter which can be taken into account in assessing the validity of the restraint. He attended what were called Terminal Board Meetings. Between 5 February 2015 and 22 April 2016 he attended six such meetings in all. Board packs were provided to directors and to members of the senior leadership team, whose employment contracts contained substantially the same restraints as are found in Mr Guy's contract. The detail of the information in the board papers, so far as they concern the Port Botany Terminal, is detail that Mr Guy would have been privy to in his capacity as General Manager of the terminal.
20. Thus, in relation to the Port Botany Terminal, information for which Mr Guy was responsible included details of revenue, volumes, labour costs, equipment running costs, other operating costs, overheads, EBITDA, including EBITDA margins. This information was both for the year to date and forecasts for the rest of the financial year. It also included such information with a comparison against budgets. It contained details of shift crane rates and capital expenditure, both actual and forecast. The papers also included details of projected timelines for renegotiation of contracts with clients, including the date of expiry of contracts and the annual volumes for each client.
21. Mr Kruse deposed that existing contracts might be sought to be renegotiated before their expiry. Knowledge of such an intention could be of considerable assistance to a competitor. There are only a small number of companies operating container stevedoring operations at the terminal.
22. Mr Kruse also deposed, paragraph 47: "Even if Patrick was able to determine that a particular customer contract was up for expiry or renewal, it would not know the annual volumes from that customer, the revenue generated from that customer or the status of DP World's negotiations or the sticking points in those negotiations. The information relates to circumstances that are very unlikely to material [scil. materially] change or be resolved within the next 6 months".
23. As to this evidence, Mr Guy only says that he has not retained and has no independent recollection of any of the material referred to in the previous paragraphs of Mr Kruse's affidavit, being information in the board papers, including information as to the dates of expiry of contracts, the revenue obtained from each contract and the status of negotiations.
24. Mr Guy also has knowledge of the detail of DPW's expansion plans, including, specifically, where and what expansion was targeted, projections of customer volumes, revenue, EBITDA and margins.
25. This information goes well beyond the development of an employee's skills, or general knowledge of an industry that is part of the personal aptitude of the employee which it is against public policy to attempt to sterilise. It even goes beyond a general knowledge of DPW's business. It comprises confidential information and trade secrets.
26. The clause is not invalid, and it would not be proper to refuse injunctive relief, because Mr Guy does not now have the documents which contain the specific information and of which he says he does not recall the details. The words of Megaw LJ in The Littlewoods Organisation Ltd v Harris are apposite. His Lordship said (at 1038-1039): "It is, I think clear from the judgment of Cross J in the case to which Lord Denning MR has already referred, Printers and Finishers Ltd v Holloway ([1964] 3 All ER 731 at 736, [1965] 1 WLR 1 at 6), that it is appropriate that a covenant, restricting an employee from full freedom of taking other employment when he leaves his existing employment, should be included in the contract of employment where there is a real danger that the employee will in the course of that employment have access to and gain information about matters which could fairly be regarded as trade secrets; and that applies even though the information may be carried in his head and even though (perhaps, particularly though) it may be extremely difficult for the employee himself, being an honest and scrupulous man, to realise that what he is passing on to his new employers is matter which ought to be treated as confidential to his old employers. I observe that Cross J ([1964] 3 All ER 731 at 736, [1965] 1 WLR 1 at 6) in his observations on this matter said: '… I do not think that any man of average intelligence and honesty would think that there was anything improper in his putting his memory of particular features of his late employer's plant at the disposal of his new employer. The law will defeat its own object if it seeks to enforce in this field standards which would be rejected by the ordinary man.' As I understand it, Cross J, with all the authority which is to be attributed to a judgment of his, indicated that, even though in such a case it would not be right to attempt to enforce a covenant against the disclosure of confidential information, it is nevertheless appropriate that there should be protection in the form of a covenant limiting the employee's scope of employment for a period."
27. It is not an answer that Patrick's operations at Port Botany are wholly automated, whereas, DPW's operations are not and that, accordingly, Patrick's costs, or costs base, will be different from DPW's. It would still give Patrick a significant commercial advantage, against which DPW is entitled to be protected by a reasonable restraint, if it knew the costs and cost restraints to which DPW was subject, or if it knew the flexibilities and opportunities that DPW enjoyed, which it could use in negotiating terms of new contracts.
28. Counsel for DPW also submitted, correctly in my view, that Mr Guy had, ultimately, built up a customer connection with clients at DPW. He attended meetings with clients, or potential clients, in order to pitch DPW's efficiencies in the operation of the terminal. Mr Kruse deposed that, at such meetings, Mr Guy's role was to explain how the terminal operated and, generally, to present the picture of a skilled and competent manager of logistical processes. Mr Guy deposed that during the twelve month period ending on 28 April 2016, he had worked or had dealings with five shipping line customers and two suppliers. He said that, as far as he could recall, meetings with clients at the terminal occurred about once every two months, at the most, and he was always accompanied by a member of the commercial department who was the client's point of contact. His role at such meetings was to provide technical information on the terminal's operation to the client, if requested to do so.
29. Mr Guy would be expected to perform a similar role working for Patrick. He offers an undertaking not to participate in "quarterly review meetings with shipping lines and consortia to whom Patrick provides stevedoring services" prior to 28 October 2016.
30. As I have said, the validity of the restraint in cl 19.1 is to be judged in the light of the grant to DPW of the right to require Mr Guy to go on gardening leave for three months before the three-month post-employment restraint commenced. In effect, the contract allowed for Mr Guy, if he gave notice of termination of his contract, to be taken out of the market for a period of six months and that is what has happened.
31. Having regard to the seniority of Mr Guy's position, the nature of the plaintiff's business, the small number of competitors operating in the same port as DPW and, in particular, the confidentiality of the information that Mr Guy would be expected to obtain and use and which he did so acquire, I think such a six-month restraint is not larger than is reasonably necessary to protect DPW's legitimate interests in preserving its confidential information.
32. I do not say a restraint for that length of time could be justified in the interests of protecting DPW's customer connection, having regard to the nature of Mr Guy's role. Nonetheless, its interest in protecting the customer connection provides some, although I think slight, further support for the validity of the restraint.
33. It is also relevant that by cl 19.3, Mr Guy acknowledged that each restriction in cl 19.1 was reasonable and necessary to protect DPW's legitimate business interests.
34. Mr Guy deposed that he did not obtain legal advice before signing the contract. He did not suggest that he did not read the clause, or did not understand it. Nor did he suggest that when he signed the contract, he did not consider whether the restraints were reasonable, or did not think that they were.
35. I consider that, not only is there a serious question to be tried that the restraints are valid, but that the plaintiff has a strong case for saying that they are.
36. On the balance of convenience, or to put it another way, the balance of the risk of doing an injustice, the case heavily favours DPW. It could suffer irreparable harm if its confidential information were disclosed to Patrick, either wittingly or unwittingly. For example, if information about its costs, budgets, contract expiry dates, contract negotiations, revenues or budgets were disclosed.
37. On 18 July 2016 Mr Guy signed an undertaking that was delivered to the plaintiff. He undertook, amongst other things, to keep confidential information described in cl 13 of the contract as "Confidential Information". On 28 July 2016, after the conclusion of the substantive argument, he provided an undertaking that was premised upon his not being restrained to work for Asciano. In that undertaking he undertook not to solicit or accept an approach from any one of 16 customers and two suppliers, who were identified by name, for the Patrick business.
38. He also undertook not to interfere with the relationship between any company in the DP World Group, and any of its customers, suppliers, group employees or contractors. As noted above, he also undertook not to participate in any quarterly review meetings referred to earlier in these reasons.
39. The giving of those undertakings, at least so far as they were intended to preserve the confidentiality of DPW's confidential information and trade secrets, does not meet the need for restraint on employment by a competitor.
40. As identified in the reasons in The Littlewoods Organisation Ltd v Harris, as has been frequently applied in this State, the justification for the restraint by an employee against taking up employment with a competitor is not to protect the employer from competition. Its justification is that such a restraint is necessary, or may be necessary, depending on the circumstances and the length of the restraint, in order to protect the employer from either a witting or an unwitting disclosure of such confidential information, having regard to the difficulties that an employer faces in attempting to identify or prove any such breach.
41. I do not consider that the undertakings that are proffered displace the balance of convenience that otherwise favours the plaintiff.
42. So far as hardship to the plaintiff is concerned, Mr Guy deposed that if he were unable to take up his employment with Asciano on and from 29 July 2016 he and his family would experience some financial hardship, and to a certain extent, would have to live off savings. That hardship, however, has been addressed by the plaintiff's having offered to pay to Mr Guy amounts equivalent to three months' salary that he would otherwise have earned if he were free to take up his employment with Asciano. I will hear counsel in due course as to the precise terms of the undertaking proffered in that regard.
43. There was no evidence that Mr Guy would not be able to take up his employment with Asciano if he were not free to take up his position before 28 October 2016.

Delay

1. I turn, then, to the question of delay. Counsel for the defendants pointed to the plaintiff's delay from 4 May to 21 July in the commencement of these proceedings. This delay arose notwithstanding that on 4 May Mr Guy committed what on the plaintiff's case was an anticipatory breach of contract by threatening to take up employment with Patrick on 29 July. It was only a week before the expiry of his employment with DPW that these proceedings were commenced.
2. Mr Goot SC, who appeared for the defendants, referred in particular to what was said by Campbell J in Capgemini US v Case [2004] NSWSC 674 at [40]. That was also a case in which an interlocutory injunction was sought to restrain a former employee from taking up employment.
3. Campbell J said (at [40]): "[40] If interlocutory relief is to be sought, it should always be sought promptly: Zuellig v Pulver [2000] NSWSC 7 at [36] - [37]. The court is always entitled to use, as a litmus test of the seriousness of the infringement of a plaintiff's rights which is occurring, how fast the plaintiff reacts to the infringement of its rights. It is not only as an example of the equitable doctrine of laches that delay is relevant on an application for an interlocutory injunction; it is also as an admission by conduct about how serious the infringement of the plaintiff's rights is. Thus, it is a matter which goes to the balance of convenience and not merely to the question of whether there is a serious question to be tried, which might be met by a defence of laches at the trial."
4. Delay was one of the factors that his Honour took into account in refusing the injunction that was sought. The others were that his Honour assessed the plaintiff's case for final relief as not being strong, that the plaintiff would not gain a great advantage if an injunction were to be granted by comparison with its situation if it were left to its remedy in damages, and that an innocent third party would be inconvenienced by the grant of the injunction.
5. In this case there has been no actual infringement of the plaintiff's rights. I do not think it can be implied by the delay in commencing the proceeding that DPW regarded the threat to take up employment in breach of the restraint in cl 19.1 as anything other than serious. Part of the delay might be attributable to the correspondence that passed between the parties' solicitors' relating to the identification of records held in electronic form by Mr Guy, or the documents that he had received, and in the plaintiff's being satisfied that all such materials had been returned or deleted. Some time was also spent in the parties' negotiating terms of inter-parties' undertakings, although for what ultimate purpose, given that any such undertaking would not rise higher than the contracts, is a little difficult to discern. No doubt the giving of such undertakings brings home to the employee's mind the importance of his contractual obligations. Nonetheless, delay there was in commencing these proceedings.
6. In Network Ten Ltd v Fulwood (Supreme Court of NSW, Young J, 4 December 1995, unreported; BC9501805) Young J said: "... the court expects in cases of interlocutory injunction that people will act promptly. As I sit here in this duty list, if a person had let a week go by it is only a very strong case that I can be persuaded to grant an injunction or grant short service, because [if] a person is to seek an injunction it should be sought promptly."
7. His Honour went on to say that it was a "very strong discretionary matter" to take into account that the court was not approached as early as possible, and his Honour said that on an interlocutory injunction the court "in its discretion will refuse the injunction if there has been delay which is not adequately explained".
8. Read as a whole his Honour's observations are clearly directed to delay being an element in the exercise of a discretion, and delay may lead to an interlocutory injunction being declined.
9. To the same effect, in J D Heydon, M J Leeming and PG Turner, Meagher, Gummow and Lehane's Equity: Doctrines & Remedies, 5th ed, 2015 LexisNexis Butterworths at [21-375], where the learned authors observed: "As far as laches and delay are concerned, the cases are full of warnings. Megarry J in Legg v Inner London Education Authority [[1972] 3 All ER 177; [1972] 1 WLR 1245] nearly declined interlocutory injunctions because the plaintiffs had been guilty of 12 weeks' delay and Goff J, in Texaco Ltd v Mulberry Filling Station Ltd [[1972] 1 All ER 513; [1972] 1 WLR 814] was troubled by a lesser period. Excessive delay was the plaintiff's downfall in Carlton and United Breweries (NSW) Pty Ltd v Bond Brewing New South Wales Ltd [(1987) 76 ALR 63, discussed and distinguished by Lehane J in Philips Electronics NV v Remington Products Australia Pty Ltd (1997) 150 ALR 355]. However, in Express Newspapers plc v Liverpool Daily Post and Echo plc [[1985] 3 All ER 680; [1985] 1 WLR 1089], Whitford J refused to uphold a defence of delay where the occasion of the delay was that the plaintiff was seeking undertakings in lieu of an injunction from the defendant. Obviously if the delay is coupled with some such factor as the intervention of third party rights or prejudice to the defendant, an interlocutory injunction should be refused just as a final injunction should be refused. But authority is not wanting that on an interlocutory application - where different principles apply from those which would be applicable on a final hearing [See White v Taylor (1874) 8 SALR 1. See also Swaine v Great Northern Railway Co (1863) 4 De G J & Sm 211; 46 ER 899; Lindsay Petroleum Co v Hurd (1874) LR 5 PC 221] - mere delay of itself can (not must) be fatal. Why should a court grant urgent relief when the plaintiff's tardiness in applying for it casts doubt on the reality of the alleged injury?"
10. I think that passage fairly summarises the relevant principles.
11. I accept the submission of counsel for DPW in relation to the absence of obvious prejudice from the delay. The only prejudice identified has been the inability of the parties to have a final hearing. The plaintiff submitted that this delay was prejudicial to it. It has to give an undertaking to damages, and it has proffered an undertaking to pay the equivalent of three months' salary, to meet Mr Guy's claim of hardship.
12. In some cases prejudice from delay, in circumstances such as the present case, could arise because the plaintiff need establish for the first limb of its claim only that there is a serious question to be tried. But in the present case, I have assessed the strength of the plaintiff's case, and I have done so based either on the defendant's own evidence or on evidence that was not disputed.
13. Accordingly, I think this is a case of "mere delay," which is not to minimise its significance. However, for the reasons I have given, I do not consider that the delay casts doubt on the reality of the threatened injury, and it is but one discretionary factor in the decision whether to grant or withhold injunctive relief.
14. Throughout the period of delay both parties were sticking to their guns as to the date from when the three-month restraint period against employment would operate. Whilst one would expect the plaintiff to be the moving party, as it ultimately was, it must be borne in mind that it was also open to the defendant to bring proceedings for final relief, to seek a declaration as to his entitlement to take up employment after 28 July.
15. Having regard to the strength of the plaintiff's case, as I perceive it to be, the absence of hardship and the extent of possibly irrevocable harm that the plaintiffs might suffer, I do not consider that an injunction should be refused on account of delay.
16. For these reasons, and subject to hearing from counsel as to the precise terms of the undertaking which is proffered in respect of the payment in the same amount as the three months' salary that Mr Guy would otherwise have earned, I propose to make orders in accordance with paragraph 10 of the summons, and I will hear the parties on costs. [Counsel addresses.]
17. Upon the plaintiff by its counsel giving the usual undertaking as to damages, and further undertaking to the Court and to the defendant to make three eligible termination payments to the plaintiff, on 15 August, 15 September and 15 October 2016; each such payment being in the amount of $24,166.67 less superannuation contributions and tax required to be deducted by the plaintiff, I order that up to and including 27 October 2016, or earlier further order, the first defendant be restrained from;
18. working for the second defendant Asciano Executive Services Pty Ltd, or any related body corporate, including Patrick, a division of Asciano Ltd (whether directly, indirectly as employee, contractor, officer, agent or otherwise) in any capacity;
19. engaging in or preparing to engage in any other business or activity that is the same as or similar to any part or parts of the Business, as defined in clause 19.4 of the contract of employment dated 27 June 2014, between the plaintiff and the first defendant;
20. soliciting, canvassing, approaching or accepting any approach from any Customer or Supplier (as those terms are defined in the said clause) with a view to obtaining the custom or supply of that customer or supplier in a business that is the same as or similar to any part or parts of the Business;
21. interfering with the relationship between any Group Member, as defined in clause 28.4 of the said contract, and any of their customers, suppliers, Group Employees or contractors;
22. inducing or assisting any Group Employee to leave their employment with a Group Member or;
23. disclosing or using the confidential information (as defined in cl 28.3 of the said contract) of the plaintiff.
24. I will hear the parties on costs. [Counsel addresses.]
25. I stand the proceedings over into the expedition list on Friday, 5 August 2016.
26. The plaintiff has succeeded on the application. Mr Goot submits that either costs should be reserved or costs should be costs in the cause. There are two reasons for that. The first is that the application is interlocutory. Secondly, he relies upon the fact that it was only during the course of argument that the plaintiff offered an undertaking to pay the same amount as the salary that Mr Guy would have earned had he been enabled to take up his employment with Asciano.
27. I am not satisfied that matters would have panned out any differently had the way in which the offer was ultimately formulated been formulated at an earlier stage. The compensation of three months' salary had earlier been offered as part of a quid pro quo in relation to negotiation of a deed poll. I think the sticking point between the parties was the matter of principle as to whether or not Mr Guy should be restrained from taking up employment with Asciano. The offer was not taken up as a means of resolving the application when it was made. In any event, that offer went only to one part of the case. It was a factor only. It was taken into account in the decision I have made. I do not think it is a sufficient reason to depart from the prima facie position that costs should follow the event.
28. The matter will be stood into the expedition list, and it may be that it will proceed to final hearing, and if it does it may be that the plaintiff will fail at a final hearing. In those circumstances, it might be said that the defendants should not have been put to the costs of any part of the matter, including the costs of the interlocutory hearing, even though the plaintiff was successful. I do not think that is a sufficient reason to reserve costs, or to order that costs be costs in the cause. The question, however, is whether that is a sufficient reason for the costs of the interlocutory application being the plaintiff's costs in the proceedings, so that it will get the costs if it wins, and would not have to pay the defendants' costs of the application if it ultimately loses. That is a matter upon which I have not yet heard submissions from the parties, and I will invite submissions on that question now. [Counsel addresses.]
29. After some further submissions, the plaintiff accepts that the appropriate order is that the costs of the application for interlocutory relief be the plaintiff's costs in the proceedings, and I so order.
30. I dispense with the requirement for the filing of a notice of motion for expedition.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 04 August 2016