Discretion
23The remaining and crucial question, therefore, pertains to the Court's discretion to grant or withhold injunctive relief. All equitable relief is discretionary. That is so even of an injunction to restrain a breach of a negative contractual stipulation, although discretion to decline relief is rarely exercised in that context. Nonetheless, that discretion exists, and the grant of an injunction on a final basis, even in such a case, remains ultimately discretionary. The existence of that discretion has been recognised in the context of applications to enforce restraints of trade: in the first instance decision in Kone Elevators Pty Limited v McNay (NSWSC, Young J, 10 March 1997, unreported), the reversal of which in the Court of Appeal did not affect his Honour's judgment on that point; in Dalysmith Corporation (Aust) Pty Limited v Cray Personnel Pty Limited (NSWSC, Young J, 14 April 1997, unreported, BC9701250); in RBM Plastic Extrusions Pty Ltd v Diaz [2006] NSWSC 1332, at [21]; and in John Fairfax Publications Pty Limited v Birt [2006] NSWSC 995 in which, drawing on Kone v McNay and Dalysmith , I said:
Injunctive relief - discretionary considerations
45. Generally speaking, an injunction will be granted to enforce a negative contractual stipulation. In the context of restraints of trade, damages are rarely a sufficient remedy. In this case, as in most, it would be very difficult to prove and quantify the damage that may be suffered, which may accrue of a period of time. In particular, confidential information, once lost, cannot usually be recovered.
46. In exercising the discretion to grant or withhold injunctive relief, the Court has regard to the circumstances at the date of the hearing [ Kone Elevators Pty Ltd v McNay (NSWSC, Young J, 10 March 1997, unreported; reversed, but not on this point, 19 March 1997); Dalysmith Corporation (Aust) Pty Ltd v Cray Personnel Pty Ltd (NSWSC, Young J, 14 April 1997, unreported, BC9701250)]. Thus even where judged as at the date of the contract a restraint is reasonable, the Court may on discretionary grounds withhold injunctive relief if at the date of hearing there is no protectable interest - for example, if despite contemplation at the date of contract that the employee would have access to confidential information, that did not eventuate. However, it is to be born in mind that restraints of the type contained in the second limb of clause 11 are sought and given because it is recognised that it may be difficult to prove with sufficient specificity the possession of confidential information, and courts should be slow to decline as a matter of discretion to enforce such a restraint, once it is found to be valid when created, on the grounds that it is unclear what confidential information if any the employee in fact possesses: it was to provide certainty and avoid the need for detailed proof of possession and apprehended misuse of confidential information that such clauses are upheld as valid.
24Where a restraint, reasonable in the circumstances at the date of the contract, can be seen at the date of the hearing to be excessive having regard to the circumstances as they have eventuated, the court may as a matter of discretion decline to grant injunctive relief [ Otis Elevator Company Pty Limited v John Nolan [2007] NSWSC 593, [17]-[37]; Seven Network (Operations) Limited v Warburton (No 2) [2011] NSWSC 386, [90]].
25To my mind, it is highly significant that Mr Garland's employment came to an end by involuntary redundancy, after he had declined to accept a reduction in base salary. He was not terminated for cause, nor did he leave voluntarily. It is true that his termination was lawful, in accordance with the terms of the contract; accordingly, the employer is not disentitled from relying on the restraint. Nonetheless, the circumstance that he has been put out of his job by redundancy of his position, when he refused to accept a reduction in his remuneration, is striking. Unlike Mr Birt in Fairfax v Birt , and Mr Nolan in Otis v Nolan , it cannot be said that Mr Garland has been the author of his own misfortune: he did not take his chances through informed agreement to a restraint but then resign to obtain employment of the type forbidden by the restraint, let alone while his employer wanted to retain him; nor did he commit breaches of his obligations such as to warrant termination for cause; rather, he was involuntarily made redundant despite his wish to remain in Ecolab's employment, because he would not accept a reduction in his remuneration. In short, the employer has created the present situation.
26The significance of this is increased by the circumstance that, prior to signing the contract, Mr Garland had received an assurance from Mr Webb - then his supervisor at Cleantec, who was to become his supervisor at Ecolab upon completion of the acquisition - that his future at Ecolab would be "paved with gold". Although it is correct that when this assurance was given, Mr Webb was an employee of Campbell Bros and not yet of Ecolab, the expectation that it generated forms part of the circumstances in which Mr Garland signed the contract, and its subsequent falsification is relevant to the justice of enforcing the restraint by injunction in the circumstances that have eventuated. Due to no fault on his part, his employment with Ecolab lasted for a much shorter period than he had expected when he signed the restraint, in circumstances where his reasonable expectation was that his position was secure, based on assurances given to him by Mr Webb.
27These considerations are still further accentuated by the circumstance that, when provided with the draft employment contract by Ecolab for signature, Mr Garland was also provided with a document entitled "Questions and Answers", said to be intended to provide answers and clarifications to the question received by Ecolab. One question and answer in it was:
Does the restraint of trade clause apply if you are made redundant?
In general restraint of trade would not apply in the case of redundancy. However for senior management positions there could be a provision, this will be reviewed on a case by case basis.
28Mr Garland says that he took this to mean that it would not apply in his case in the event of redundancy. Such an interpretation, in the absence of legal advice, is not an unreasonable one: his position would not ordinarily be regarded as "senior management". He reasonably assumed that in the event of redundancy the restraint would not be applied. Indeed, consistent with such an assumption, while Ecolab's letter of termination reminded Mr Garland of his confidentiality obligations, it contained no reference to the post-termination restraints.
29Next, there are the changes made to the floor care business during 2011 by Ecolab. I accept that, even if Ecolab were closing down its floor care equipment business, so long as it continued to carry on the business in the meantime there remains an interest in respect of which it is entitled to protection. However, the significance of the customer connection associated with Mr Garland - primarily with service providers - is much reduced by the restructuring that essentially removes the service providers from the model, so as to require end users to deal directly with Ecolab. The class of customer contacts with whom Mr Garland dealt with has effectively been eliminated from the business structure, so that his strongest customer connection is very much diminished in significance.
30Against that, Mr Garland had been able to secure employment, which he was about to commence when he received Karcher's offer, with CHT Textiles, a chemical company that does not deal with floor care equipment, which employment would not have been in contravention of the restraints. While his skills and experience may be less suited to such employment than to his employment with Karcher, it means that the hardship to him of compliance with the restraint would be less than in many of these cases, and it may be inferred that he could, without much difficulty, find alternative non-contravening employment, although somewhat less ideally matched to his skills and experience.
31Despite that factor, the extraordinary combination of his termination being for involuntary redundancy, when he reasonably expected his employment to be secure and that in the (unlikely) event of redundancy the restraints would not apply, with the markedly reduced significance of his customer connection with service providers under the restructure, and the implicit consequence of the redundancy of his position that there is not a perceived need for a replacement employee to establish a similar connection, in the context that four months of the restraint period have already elapsed, persuades me that a court is more likely than not to decline, on discretionary grounds, to grant a final injunction to enforce the non-compete restraint. Accordingly, despite a seriously arguable case that Mr Garland is or will be in contravention of a valid and enforceable restraint, I am unpersuaded that the Court on final hearing would likely give effect to that restraint by granting a final injunction; it is rather more likely that the Court would decline to do so, on discretionary grounds. While there is an arguable case for an injunction, in a case such as the present, the ultimate prospects of success have considerable significance.
32Those considerations have much less weight in respect of the non-solicit restraint. Its enforcement will not prevent Mr Garland from earning a living in the industry and field of his preference. It will do no more than protect such remaining interest as Ecolab has in the customer connection associated with Mr Garland.