EMISSION ASSESSMENTS PTY LTD -v- JAMES JACKSON [2022] WASC 60 (24 February 2022)

3 EAPL complains that Mr Jackson's employment with Ektimo is in breach of an express contractual constraint. EAPL is also concerned about the misuse of its confidential information and has adduced evidence of what it says is unauthorised copying of its confidential information.

4 At the commencement of the hearing, counsel on behalf of Mr Jackson reiterated Mr Jackson's willingness to give an undertaking in respect of the confidential information in the terms set out in correspondence between the parties and solicitors. Mr Jackson was willing to undertake that if he does become aware of any of the plaintiff's confidential information or intellectual property in his possession that he will:

(i) immediately notify the plaintiff;

(ii) await further instructions as to what to do with the material; and

(iii) not use or disclose the material to any person or entity unless otherwise instructed by the plaintiff.

5 Counsel for the plaintiff explained that Mr Jackson's proposed undertaking was an acceptable interim measure in respect of the confidential information, but only in conjunction with an undertaking by Mr Jackson or an order of the court that Mr Jackson not commence employment with Ektimo. Counsel for the plaintiff explained that position, on the basis that the plaintiff's concerns in respect of its confidential information were intrinsically linked with its concerns relating to Mr Jackson's proposed employment with Ektimo.

6 In the circumstances, notwithstanding the undertakings proffered by Mr Jackson, it was necessary for the application to proceed. Argument absorbed the whole afternoon of 7 February 2022.

7 The relevant background is set out in the affidavits filed and relied upon by the parties. Those affidavits were as follows:

(a) for the plaintiff, the affidavit of Dr Richard Adams, an independent digital forensic expert sworn 2 February 2022; the affidavit of Mr Giacomo Collica, Managing Director of EAPL sworn 1 February 2022; and the affidavit of Mr Craig Fordham, a lawyer employed by Slater & Gorden Lawyers, representing the plaintiff in these proceedings sworn 3 February 2022; and

(b) for the defendant, the affidavit of Anthony James Spear Massaro, a lawyer at Russell Kennedy Pty Ltd, representing the defendant in the proceedings sworn 7 February 2022; and the affidavit of Mr Jackson himself, sworn 7 February 2022.

8 In the limited time available to me, I summarise briefly the relevant background as follows.

9 In his affidavit, Mr Collica described the specialised nature of the plaintiff's business. Mr Collica also explained that EAPL's offices are located in Bibra Lake, partly because it allows ready access to Kwinana. Mr Collica gave evidence that EAPL has grown to become a recognised leader in its field in Australia and has a list of prominent clients.

10 In his affidavit, Mr Collica explained the following in relation to EAPL and Ektimo:

Even after 14 years of operation, there is still only one other business that has a physical office located in Western Australia which can provide services that may be considered as an alternative to those provided by EAPL. The other competitor business which has a presence in Western Australia is Ektimo Pty Ltd.

The Ektimo office in Western Australia is located only a short distance from EAPL's office in Bibra Lake.

Ektimo also provide emission testing services to the same industrial sectors as EAPL. Unlike EAPL, Ektimo has offices that are located in other parts of Australia including Victoria, New South Wales and Queensland.[2]

11 Although Mr Collica referred to a number of clients, his affidavit evidence placed particular emphasis on Alcoa. Alcoa appeared to be referred to by Mr Collica as the principal example of what he described as a trend of EAPL winning work away from Ektimo.

12 Mr Collica explained that as far as he knew, EAPL and Ektimo were the only similar businesses based in Western Australia, although there were other companies providing similar services but based in other states.

13 Mr Collica explained in his affidavit that in about August 2019 he decided to recruit a new employee. He was unable to locate someone in Western Australia and therefore engaged someone to recruit overseas. Mr Collica deposed to the fact that the plaintiff expended significant sums of approximately $20,000 to recruit Mr Jackson from Scotland. Mr Collica in his affidavit gave evidence that the recruitment and application process took between six to eight months to complete. Mr Collica's evidence in his affidavit was that from about January 2020, Mr Jackson first commenced employment with the plaintiff in the position of Senior Environmental Scientist.

14 Mr Collica annexed to his affidavit the plaintiff's letter to Mr Jackson dated 10 January 2020, which offered Mr Jackson the position of Senior Environmental Scientist and enclosed a formal contract of employment. The letter is countersigned by Mr Jackson on 10 January 2020 and the formal written contract was signed by both parties on the same date. I shall refer to that contractual document as the January 2020 contract.

15 There appears to be some doubt about the chronology set out by Mr Collica in his affidavit in light of the affidavit of Mr Jackson and the documents annexed to his affidavit. From Mr Jackson's affidavit and the documents annexed, it is apparent that the plaintiff first offered employment to Mr Jackson in May 2019 as a Senior Environmental Scientist - Air Services and that Mr Jackson accepted that offer on 6 May 2019 and then came to Western Australia on a working visa at his own expense. He commenced employment with the plaintiff in July 2019. As the working visa was only valid for six months, the plaintiff made arrangements to secure Mr Jackson's employment on a visa of longer duration for a period of four years. This led to the letter and contract of 10 January 2020, referred to by Mr Collica in his affidavit, that is, the January 2020 contract.

16 It is common cause that Mr Jackson's commencing salary was $70,000 plus superannuation. There can be no doubt that this reflects a fairly modest salary in contrast to the sort of package one might expect of a senior employee in a highly specialised field. It also appears to be common cause that Mr Jackson was required to give two weeks' notice of termination.

17 On 24 March 2020, Mr Jackson was offered and accepted the new position of Acting Principal (Air Quality). That offer came in a letter from the plaintiff countersigned by Mr Jackson, which stated that the relevant duties had been provided and were also included in 'the attached Contract of Employment'. The letter went on to state that 'the additional terms and conditions of employment are as set out in the attached Contract of Employment'.

18 The contents of the letter therefore suggested that the January 2020 contract had been superseded by a fresh contact of employment. However, it appears to be common cause that, notwithstanding the words of the letter, no document was attached to that letter.

19 By letter dated 25 June 2020 (countersigned by Mr Jackson) the plaintiff again wrote to Mr Jackson and offered him employment in the position of Acting Principal (Air Quality). Again, the letter referred to the duties having been provided to Mr Jackson and stated that they were also 'included in the attached Contract of Employment'. On this occasion, although no document titled 'Contract of Employment' was attached, the letter did attach or enclose two pages relating to the description, purpose, requirements and responsibilities in relation to the position as well as other miscellaneous matters such as the relevant skills and qualifications.

20 There is no dispute that with Mr Jackson's promotion to Acting Principal (Air Quality), his salary remained at $70,000 per annum, which was increased to $75,000 per annum by the letter of 25 June 2020. It was then increased to $95,000 per annum effective 1 October 2021 with his appointment to Principal (Air Quality) rather than Acting Principal.

21 Mr Collica, in his affidavit, explained that Mr Jackson was the most senior person working in his particular area, with the highest level of technical and commercial knowledge of EAPL's practices. Mr Collica's evidence was that as part of Mr Jackson's role, he had broad access to EAPL's commercial practices and financial information, as well as detailed knowledge of its technical processes. Mr Collica's evidence was that Mr Jackson had wide access to EAPL's information, including 'information, tender documents, technical information and quality assurance information'.[3] Again, in that context, Mr Collica made particular mention of Alcoa.

22 In his affidavit, Mr Jackson gave quite a different complexion to the nature of the information to which he had access. Mr Jackson does not deny that he had access to information at EAPL that was confidential. However, he says, much of his work involved the application of his own developed and acquired skills and that he had a more limited role in relation to the more confidential aspects of EAPL's business than Mr Collica described.

23 It is not possible for this issue to be resolved at an interlocutory stage. It is sufficient to observe that there can be no doubt that Mr Jackson had access to some confidential information and was able to access and copy it.

24 Although there is some dispute about when Mr Jackson first told Mr Collica that he intended to leave and work for Ektimo, it is not in dispute that Mr Jackson's formal resignation was tendered on 20 December 2021. In his affidavit, Mr Collica gave evidence that Mr Jackson told him on 20 December 2021 that he was going to work for Ektimo. Mr Collica sought to provide inducements for Mr Jackson to remain with EAPL, but was unsuccessful.

25 Mr Collica also gave evidence that in his discussion with Mr Jackson on 20 December 2021, he referred Mr Jackson to the term of his contract restricting him from working for Ektimo.

26 This was confirmed in a letter from EAPL's solicitors to Mr Jackson dated 23 December 2021, in which EAPL's solicitors told Mr Jackson that cl 11 of the January 2020 contract and indeed, other legal constraints, prevented him from working for Ektimo, and threatened injunctive relief in the event that Mr Jackson did not give appropriate undertakings.

27 In response, lawyers for Mr Jackson by letter dated 31 December 2021, amongst other things, undertook only that he would not commence employment with Ektimo before 31 January 2022. This is consistent with Mr Collica's affidavit evidence that Mr Jackson told him before his departure that his role with Ektimo was due to start in or about the second week of February 2022.

28 It follows that from 23 December 2021, EAPL was aware that Mr Jackson was intending to work for Ektimo from early February 2022 and had engaged lawyers with a view to the prospect of bringing an application to prevent that from happening. At no stage from the time of his resignation on 20 December 2021, did Mr Jackson resile from his very clear and open intention to work for Ektimo from early February 2022.

29 Mr Jackson was instructed to leave the EAPL premises on 20 December 2021 and work out his notice period from home until 3 January 2022.

30 A considerable amount of evidence was directed towards Mr Jackson having copied information from EAPL's server on 17 December 2021, which is the day on which, on his own evidence, he resolved to leave EAPL. EAPL produced a report from its own IT provider and a separate affidavit from Dr Richard Adams, an external forensic IT expert, indicating that Mr Jackson had copied a significant number of files on 17 December 2021 and had access to those files again on 17 January 2022. The reports do not go so far as to provide clear evidence of copying on 17 January 2022. The reports referred to evidence of access for a period of time giving rise to an inference that they were 'likely' copied or 'potentially' copied. Counsel for EAPL explained that there was no other explanation for the level of access reflected in the expert reports, other than for the purpose of copying.

31 Mr Jackson in his affidavit provided evidence that he says shows that his copying of the files on 17 December 2021 and his access to the documents on 17 January 2022 were entirely accidental and innocent.[4] Indeed, he says that his access on 17 January 2022 was in response to the letter he received from EAPL's lawyers providing him with a report from EAPL's IT provider, raising the concern of the inappropriate transfer or copying of confidential information. In short, Mr Jackson says he accessed the information to check what he had done and remedy any problem. Mr Jackson strongly denied that he had misused any confidential information. It is not in dispute that immediately following the letter from EAPL's solicitors on 17 January 2022, Mr Jackson handed up a USB device on which he had copied files from EAPL's server.

32 Mr Collica, on behalf of EAPL, points out that the timing of the access on 17 December 2021 and 17 January 2022 is highly suspicious.[5] He says that Mr Jackson made no reference to having copied these documents when he resigned or left the company and that in the circumstances, Mr Jackson cannot be trusted in respect of what he might have done with confidential information which Mr Collica alleges Mr Jackson copied.

33 Clause 18 of the January 2020 contract provides as follows:

18.1 Without limiting the Employee's duties at common law, the Employee must at all times during employment with the Company (except as required by law, an order of a competent court, or with the express written consent of the Company or in the proper course of the Duties) and after its termination (howsoever caused), keep confidential and not use or disclose or allow to be disclosed to any other person, any Confidential Information or Intellectual Property relating to the Company or its clients.

18.2 T he Employee shall use the Employee's best endeavours to prevent the unauthorised use or disclosure of Confidential Information or Intellectual Property and must assist in any action taken by the Company in respect of any unauthorised use or disclosure of Confidential Information or Intellectual Property or details of or information relating to the Company which comes to the Employee's knowledge.

18.3 The Employee must immediately notify the Company if the Employee becomes aware of any breach of the obligations in this clause 18.

18.4 This clause 18 continues to apply after termination of the employment.

34 The January 2020 contract defines 'Confidential Information' as follows:

'Confidential Information' means all information (whether or not it is described as confidential) in any form or medium concerning any past, present or future business operation or affairs of the Company or of any client of the Company including without limitation:

(a) information relating to this Contract and the Employee's terms and conditions of employment;

(b) the business, finances, transactions, affairs, products, services, processes, equipment or activities of the Company which is designated by the Company as confidential;

(c) all products, ideas and concepts concerning the technology of the Company;

(d) research and development information, financial details and information, business plans, marketing plans and strategies, and any other information about the Company, its business, its products and services or plans;

(e) all information concerning any employee, client or agent of the Company;

(f) all information relating to such matters which comes to the knowledge of the Employee in the course of the employment under this Contract and which by reason of its character and/or the manner of its coming to his knowledge is evidently confidential;

provided that information shall not be or shall cease to be Confidential Information if and to the extent that it comes to be in the public domain otherwise than as a result of the unauthorised act or default of the Employee or any other person.

35 As I explain below, there is a contested issue about the application of the January 2020 contract. In any event, EAPL contends that Mr Jackson was in breach of a range of common law, equitable and statutory duties by his copying and misuse of EAPL's confidential information.

36 There is plainly a triable issue in relation to whether Mr Jackson breached his contractual and other obligations in respect of EAPL's confidential information. It is neither possible, nor appropriate, for the court to seek to resolve these strenuously contested issues at this stage.

37 I note that Mr Jackson has proffered undertakings which, putting his employment with Ektimo to one side, are otherwise acceptable to EAPL for the time being. As the parties are aware, Mr Jackson has now given those undertakings to the court and thus if the undertakings are breached, it may well carry very serious additional consequences.

38 The real issue for present purposes is therefore whether the court should make orders restraining Mr Jackson from commencing his employment with Ektimo.

39 I therefore turn now to consider the question of whether interlocutory injunctive relief should be granted to restrain Mr Jackson from commencing his employment with Ektimo.

40 The principles governing the grant of injunctive relief are not in dispute. They were set out by Beech J in Twinside Pty Ltd v Venetian Nominees Pty Ltd at paras 7 ‑ 12 and need not be repeated.[6]

41 In respect of the restraint, EAPL relies on cl 11 of the January 2020 contract. Clause 11 provides as follows:

11.1 In consideration of the Salary Package the Employee must not after the Termination Date without the Company's prior written consent, directly or indirectly carry on (whether alone, in partnership or in joint venture with anyone else) or otherwise be concerned with, interested in or employed in (whether as employee, trustee, principal, agent, shareholder, unit holder or in any other capacity) any Competing Business;

(i) in Western Australia, for the greatest of the following alternative time periods which is enforceable either at law or in equity:

(a) the Restraint Period as specified in Item 6 of Schedule A from the Termination Date;

(ii) in Perth Metropolitan Area for the greatest of the following alternative time periods which is enforceable either at law or in equity:

(a) the Restraint Period as specified in Item 6 of Schedule A from the Termination Date;

(iii) in Bibra Lake for the greatest of the following alternative time periods which is enforceable either at law or in equity:

(a) the Restraint Period as specified in Item 6 of Schedule A from the Termination Date.

11.2 This clause does not exclude the Employee from owning marketable securities of a corporation or trust which is listed on a recognized (sic) Stock Exchange in Australia or elsewhere provided that the Employee holds not more than 3% of the total marketable securities with a corporation or trust.

11.3 The Employee and the Company agree and acknowledge that:

(i) the restraints contained in this clause are reasonable; and

(ii) are the only effective, fair and reasonable manner in which the interest of the Company in the Business can be protected and intend the restraints to operate to the maximum extent.

11.4 If the restraints contained in this clause 11:

(i) are void as unreasonable for the protection of the Company's interests; and

(ii) would be valid if part of the wording was deleted or the period or area was reduced,

the restraints will apply with the modifications necessary to make them effective.

11.5 The restraints contained in this clause are separate, distinct and several, so that the unenforceability of any restraint does not affect the enforceability of the other restraints.

11.6 The Employee's obligations under clause 11.1 survive the termination of this Contract.

42 On the basis of the background set out above, it is apparent that there is a real question as to whether the January 2020 contract containing cl 11 and the other relevant provisions applied to Mr Jackson's employment at the time that he resigned. With admirable candour, counsel for the defendant drew my attention to cl 2.4 of the contract which may be of some significance. Clause 2.4 provides that if Mr Jackson's position changes for any reason, then the terms of the contract will continue to apply unless expressly varied by the parties in writing. It may well be that cl 2.4 has the effect that cl 11 of the Janaury 2020 contract continued to apply to Mr Jackson at the time of his resignation. In addition, EAPL contends that the parties at all times conducted themselves on the basis that the January 2020 contract governed the relationship between the parties.

43 Counsel for Mr Jackson did not accept that the January 2020 contract and therefore cl 11 was applicable. It is not possible at this stage to make a determination about that issue.

44 I accept however, that there is a serious question to be tried as to whether the January 2020 contract and the particular provisions of cl 11 and cl 12 applied to Mr Jackson at the time of his resignation. On the basis that there is a serious question to be tried in relation to the application of the January 2020 contract, and therefore the potential breach of cl 11, I turn to consider the approach of the courts to such restraints.

45 The leading appellate authority in this jurisdiction is Smith v Nomad Modular Building Pty Ltd, in which McClure JA said:

The test to be applied in determining the validity of a restraint of trade was stated by Lord Macnaghten in Nordenfelt v The Maxim Nordenfelt Guns and Ammunition Co Ltd [1894] UKLawRpAC 52; [1894] AC 535 at 565 in a passage that has been cited with approval in many cases. Lord Macnaghten said:

'All interference with individual liberty of action in trading, and all restraints of trade of themselves, if there is nothing more, are contrary to public policy, and therefore void. That is the general rule. But there are exceptions: restraints of trade and interference with individual liberty of action may be justified by the special circumstances of a particular case. It is a sufficient justification, and indeed it is the only justification, if the restriction is reasonable - reasonable, that is, in reference to the interests of the parties concerned and reasonable in reference to the interests of the public, so framed and so guarded as to afford adequate protection to the party in whose favour it is imposed, while at the same time it is in no way injurious to the public'.[7]

A restraint is reasonable in relation to the restraining party if it is necessary for the adequate protection of that party and reasonable in relation to the party restrained if it preserves the fullest liberty of action consistent with that protection: Brightman v Lamson Paragon Ltd (1914) 18 CLR 331 at 337 per Isaacs J; Buckley v Tutty [1971] HCA 71; (1971) 125 CLR 353 at 376. [8]

Whether a restraint of trade is reasonable is a question of law which depends on the true construction and legal effect of the contract: Amoco Australia at 305 per Walsh J; Haynes v Doman [1899] UKLawRpCh 69; [1899] 2 Ch 13 at 24 per Lindley MR.[9]

The proper course is to examine the range of interests relied on by the respondent said to require protection and to determine whether one or more of those interests are reasonable by reference to the interests of the parties to the contract and the interests of the public.[10]

However, if any actual or potential effect on goodwill, direct or indirect, is a protectable interest of the employer, that would justify a restraint clause preventing a former employee taking employment with a competitor merely because the new employer was a competitor.[11]

Covenants that restrain an ex-employee from competing with the ex-employer are at common law contrary to public policy and void unless it can be justified by the special circumstances of the case. Special circumstances means no more than the facts of the particular case from which reasonableness can be inferred. The Court will judge whether the restriction is reasonable having regard to the interests of the parties concerned and to the interests of the public. If the restraint is not reasonable by reference to the interests of the parties and the public then it is contrary to public policy and void. Buckley v Tutty [1971] HCA 71; (1971) 125 CLR 353 at 376; Lindner v Murdock's Garage [1950] HCA 48; (1950) 83 CLR 628 at 653 and Portal Software International Pty Ltd v Bodsworth (2005) NSWSC 1179 per Brereton J at [63].[12]

47 In the widely cited case of Portal Software International Pty Ltd v Bodworth, Brereton J said:

At common law, a restraint of trade is contrary to public policy and void, unless it is justified by the special circumstances of the particular case, for which purpose it is sufficient justification that the restriction is reasonable having regard to the interests of the parties concerned and in reference to the interests of the public, 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 [1894] UKLawRpAC 52; [1894] AC 535, 565; Herbert Morris Ltd v Saxelby [1916] 1 AC 688, 706, 707; Lindner v Murdock's Garage [1950] HCA 48; (1950) 83 CLR 628, 653]. While the cases refer to 'special circumstances' justifying a restraint, that means no more than facts of a particular case from which reasonableness can be inferred [J D Heydon, The Restraint of Trade Doctrine, 2nd Ed, p29]. If the restraint is not reasonable in reference to the interests of the parties and the public, it is contrary to public policy and void [Buckley v Tutty [1971] HCA 71; (1971) 125 CLR 353, 376]. This test reconciles two conflicting policies, first 'that a man should be free to use his skill and experience to the best advantage and should not be put in the position of a slave', and secondly, that covenants should be observed and enforced [Herbert Morris Ltd v Saxelby [1915] 2 Ch 57, 76; [1916] 1 AC 688; Attwood v Lamont [1920] 3 KB 571, 577].[13]

While courts commence from this same general principle in all cases of restraint of trade, a more rigorous approach is applied to restraints in employment contracts than in contracts for the sale of goodwill [Nordenfelt, 566; Mason v Provident Clothing & Supply Co Ltd [1913] UKLawRpAC 37; [1913] AC 724, 731, 738; Herbert Morris Ltd v Saxelby [1915] 2 Ch [77]. A stricter and less favourable view is taken of covenants in restraint of trade between employer and employee, than in commercial agreements [Geraghty v Minter (1979) 142 CLR 177, 185; Heydon, pp68-69; Woolworths Limited v Olson [38]].[14]

An employer is not entitled to be protected against mere competition; the legitimate interests of an employer which may be the subject of protection by covenant are in the nature of proprietary subject matter [Vandervell Products Ltd v McLeod [1957] RPC 185, 192; Tank Lining Corp v Dunlop Industrial Pty Ltd (1982) 140 DLR (3d) 659, 664], including the employer's trade secrets and confidential information, and goodwill including customer connection.[15]

In order to determine whether a restraint exceeds what is necessary for the protection of the legitimate interests of the employer and therefore void, it is necessary first to construe the restraint. Absent resort to the Restraints of Trade Act, it is then necessary to consider whether, on the particular facts proved, the restraint so construed is reasonable.[16]

48 The stricter approach of the law to employment contracts is expressly referred to by Professor Carter in Contract Law in Australia[17] at [26‑15] and by the leading text Dean's Law of Trade Secrets & Privacy at [100.2500] ‑ [100.3400].[18] The latter text also suggests that a yet stricter test applies to a former employer than during the currency of employment.

49 Relevantly, the learned author of Dean's Law of Trade Secrets & Privacy observes:

A court will take account of the nature, specialisation and competitiveness of the relevant industry in determining the reasonableness of a post-employment restraint and, more particularly, the likelihood of the misuse of confidential information by a former employee.[19]

50 As the authorities indicate, it is first necessary to determine the proper construction of the relevant contractual provision and then consider whether the provision is necessary for the reasonable protection of the plaintiff's interests.

51 Clause 11 on its face restrains the employment of Mr Jackson in any 'Competing Business'. That term is defined in cl 1.1 to mean:

1.1 Definitions

'Competing Business' means a business whether operated as a company, partnership or sole trader which as a significant part of its business engages in:

(a) an activity which is the same as, similar to or competitive with any activity engaged in by the Company as a significant part of its business during the term of this Agreement and in which activity the Employee has been involved; or

(b) [a]ir, water, and soil testing and/or consultation.

52 As set out above, cl 11 then provides for three geographical areas in respect of which the restraint is said to operate; Western Australia, the Perth Metropolitan Area and Bibra Lake. By reference to Schedule A to the contract, the relevant period of restraint is 12 months in each instance.

53 Counsel for the plaintiff submitted that on its proper construction, the restraint applied only in respect of a business that had its predominant operations in the state of Western Australia. So, for example, if a business was located in northern Western Australia but conducted its operations in the Northern Territory then the plaintiff contended the restraint would not apply. Similarly, it was said that a business located in Perth which conducted 40% of its operations in Western Australia but 60% of its operations in other jurisdictions, would not be the subject of the restraint. Counsel for the plaintiff explained that if the business was located in Perth, but all its operations were in Sydney, the restraint would not apply. On the other hand, if the competing business was located in Sydney, but all of its operations were in Western Australia, the restraint would apply to prevent Mr Jackson from being employed by that business. In other words, the plaintiff contended that 'Competing Business' should be understood as limited to a business that had its predominant operations in Western Australia, regardless of where it was located.

54 At this urgent and interlocutory stage of the proceedings, the court is not in a position to determine the proper construction of the provisions. However, I have considerable doubts as to the correctness of that construction. It seems to me that the references to the geographical areas of Western Australia, the Perth Metropolitan Area and Bibra Lake are references to the location of the business, or to the location of the proposed employment (which is likely to be the same as the location of the business), rather than to its area of operation. It may be that further consideration of the issues, including evidence of surrounding circumstances (if evidence of that is admitted) will lead to a conclusion that the location of the competing businesses' operations is in some way a factor in the operation of the clause on its proper construction. However, at least at this stage, I am not persuaded that that is necessarily so.

55 The restraint appears to operate in respect of a business that is located in each of the three designated areas, irrespective of where it conducts its operations. That means, the restraint would apply to prevent the employee from being employed by a competitor located in one of those locations in any capacity whatsoever, including in respect of operations conducted outside Western Australia. Thus, for example, if a business was located in the far north of Western Australia but conducted significant operations in say, the Northern Territory or Queensland, the restraint would apply to prohibit employment even if the employee's role was limited entirely to that company's operations outside Western Australia and had no impact on business operations in Western Australia. A further problem arises from the construction preferred by the plaintiff. As noted, Mr Collica's evidence was that Ektimo had offices in other states as well as in Western Australia. It is not clear that Ektimo's predominant operations are in Western Australia, which on the plaintiff's construction, is the basis for the operation of the restraint.

56 I observe also that, in his affidavit evidence, Mr Collica's emphasis in explaining the uniqueness of the company and the importance to it of the restraint, directed attention to the company and its sole competitor being 'based in Western Australia', and indeed close to each other in Bibra Lake with easy access to Kwinana. In context, Mr Collica's evidence related to the location of the business premises of the two businesses. To the extent that such evidence may be relevant and admissible to the construction of the contract, it would tend to support a construction of cl 11 that is directed to the location of the company's offices and the proposed employee's place of employment, rather than the area or areas of its operations.

57 It seems to me therefore, that there is a real question as to whether the restraint goes beyond that which is reasonably required for the protection of the plaintiff's interests.

58 I also observe that the rather modest quantum of Mr Jackson's salary package is not an irrelevant consideration to the reasonableness of the constraint. In Smith v Nomad Modular Building Pty Ltd, Pullin JA observed:

The appellant was a top level employee and his salary package reflected this. As the general manager of manufacturing he was privy to much strategic and operational information which a competitor would be interested to know and which the respondent was entitled to keep confidential by contractual means.[20]

The High Court has said that the remuneration of the employee may be (but not "must be") taken into account when considering reasonableness: see Amoco Australia Pty Ltd v Rocca Bros Motor Engineering Co Pty Ltd [1973] HCA 40; (1973) 133 CLR 288 at 315 - 316 where Gibbs J said:

'The requirement that the restriction be reasonable in the interests of the parties has been explained as meaning that the restraint 'must afford no more than adequate protection to the party in whose favour it is imposed' ... or in other words, 'does the restriction exceed what is reasonably necessary for the protection of the convenantee?' ... The test thus stated suggests that it is not material to consider the effect of the contract on the covenantor. It is established that the court is not entitled to enquire into the adequacy of the consideration for a restraint, that is, the court may not weigh whether the consideration is equal in value to that which the covenantor gives up or looses by the restraint ... Nevertheless the fundamental rule remains that the restraint must be reasonable in the interests of the contracting parties, and it would not be in the interest of a covenantor to subjective himself to any restraint unless he received some advantage by so doing. In my opinion it is permissible, in asking whether a restraint is reasonable in the interests of the parties, to consider, as part of the circumstances of the case against which the question of reasonableness is to be decided, the quantum of consideration received by the covenantor and the effect of the agreement on the position of the covenantor'.[21]

59 In conclusion, I find that there are serious questions to be tried in relation to the following matters:

(a) whether Mr Jackson breached his contractual, common law or other obligations of confidence in respect of EAPL's confidential information;

(b) whether the January 2020 contract governed Mr Jackson's employment at the time of his resignation; and

(c) whether cl 11 of the January 2020 contract contains a valid restraint on Mr Jackson so as to prohibit his employment with Ektimo for 12 months.

60 I turn then to consider the balance of convenience.

61 As part of that consideration, or perhaps in addition to it, an important factor here is the issue of EAPL's delay in bringing the proceedings. As I have outlined above, since Mr Jackson resigned, or at the latest, shortly thereafter, EAPL has been well aware of Mr Jackson's unambiguous and plainly expressed intention to work for Ektimo from early February 2022. EAPL has been legally advised and represented in relation to its contractual rights and threatened injunctive relief as early as 23 December 2021. It has also been aware, from the outset, of the impact on Mr Jackson's residency status in Australia of his change of employment and the significance of his proposed employment with Ektimo in that regard, a matter of some significance dealt with in more detail below. Nevertheless, proceedings were not issued until 3.49 pm, Thursday, 3 February 2022 and a corrected version at about 4.00 pm on Friday, 4 February 2022. The court accommodated EAPL's application at the earliest opportunity with a substantial, contested hearing on the afternoon Monday, 7 February 2022.

62 Counsel for EAPL said the predicament is of Mr Jackson's own making; he was the one who resigned and declined a generous offer to remain with EAPL. I accept that the situation is of Mr Jackson's own making, in the sense that, had he not resigned, none of this would have occurred. But that does little to mitigate the consequence of EAPL's delay in bringing this application in the circumstances.

63 The issue of delay in such applications was discussed by Einstein J in Idoport Pty Ltd v National Australia Bank Ltd (No 1):

A most significant and well understood discretionary consideration in relation to interlocutory applications for injunctive relief, and for relief in the nature of appointment of receivers and managers, is and has always been that a plaintiff requires to commence such proceedings with special expedition. A plaintiff who sits on his or her hands, whilst well aware that claimed rights are being infringed, takes the risk that interlocutory relief may be refused depending upon all the circumstances.[22]

64 In Meagher, Gummow & Lehane's Equity: Doctrines and Remedies, the learned authors stated:

As far as laches and delay are concerned, the cases are full of warnings. Megarry J in Legg v Inner London Education Authority 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 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 Ltd. However, in Express Newspapers plc v Liverpool Daily Post and Echo plc, 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 - 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?[23]

65 In this court, Le Miere J observed in Jaddcal Pty Ltd v Minson:

Excess delay, whilst not fatal, is a factor that weighs against the court not granting an interlocutory injunction: Carlton and United Breweries (NSW) Pty Ltd v Bond Brewing New South Wales Ltd (1987) 76 ALR 633.[24]

66 The delay here is made even more problematic because of the unique factor that is relevant to the balance of convenience, that is, the visa status of the defendant. That is a matter of which, the plaintiff has at all times, been acutely aware.

67 In unchallenged evidence, Mr Jackson explained that he has 60 days from the end of his employment with EAPL in which to procure alternative employment, failing which he cannot remain in Australia. He has given evidence that he expended his own funds to come to Western Australia and re‑establish his own professional career in the state. His evidence is he would have to borrow the funds to leave Australia and return to Scotland.

68 Mr Jackson in his affidavit, gave evidence that Ektimo became his sponsor for the purposes of his visa on 1 February 2022. Mr Jackson produced a copy of the letter from the Commonwealth Government dated 1 February 2022, approving Ektimo as his sponsor.

69 In the circumstances, EAPL has compounded the prejudice to Mr Jackson by allowing the matters to unfold without seeking the intervention of the court. It matters little whether Mr Jackson started his employment on the 7 or 8 February 2022. Either way, he will be significantly prejudiced by the restraint belatedly sought by EAPL. If Mr Jackson was now restrained from working for Ektimo, he would have less than a month to procure employment in a highly specialised area and to ensure his new arrangements met his visa requirements to the satisfaction of the relevant government authorities.

70 EAPL suggests that Mr Jackson can obtain other employment. At the same time, it is EAPL's evidence that only EAPL and Ektimo provide the services of the highly specialised skills possessed by Mr Jackson. Particularly in light of the delay, EAPL's suggestion of other employment, in my respectful view, does not sufficiently address the potential prejudice now faced by Mr Jackson.

71 In addition, in the course of submissions I raised the issue of EAPL's client Alcoa which understandably, appears to be of particular concern to Mr Collica. Mr Jackson proffered appropriate undertakings in relation to Alcoa, in addition to the undertakings relating to confidential information.

72 In Meagher, Gummow & Lehane's Equity: Doctrines and Remedies, the learned authors also observed:

Occasionally an interlocutory injunction will be refused if the defendant offers to the court an appropriate undertaking not to do the things, or some of them, of which the plaintiff complains. If such undertakings be given, it is difficult to see how the plaintiff could be worse off than if the injunction had been granted: breach of an undertaking to the court and disobedience of an injunction both constitute contempts of court and give rise to the same remedies.[25]

73 Given the undertakings given by Mr Jackson, in my view, the balance of convenience weighs against the granting of an injunction preventing Mr Jackson from commencing employment with Ektimo. As has been observed by courts many times, the task before the court is to put in place orders so as to inflict the least injustice on the parties pending the final resolution of the dispute. Those orders invariably reflect some level of compromise because the court is required to deal with the matter without the benefit of a fulsome consideration of the evidence and legal issues, all of which will take some time.

74 In light of the delay of EAPL in bringing this application and the prejudice to Mr Jackson, and in light of the undertakings given by Mr Jackson, I am not prepared to grant the injunction sought by EAPL. While I do not consider that the delay in this case would by itself, be fatal to the grant of interlocutory relief, it is a significant factor in the exercise of the court's discretion.

75 Therefore, having considered all the factors, I have come to the conclusion that the balance of justice is best served by not granting the injunction to restrain Mr Jackon's employment with Ektimo. Whilst I have found that there are serious questions to be tried in relation to the misuse of EAPL's confidential information and the reasonableness and validity of the restraint, the material before the court indicates that there are legitimate issues to be debated about those matters at a final hearing.

1. Upon the defendant's undertaking provided to the Court that he will:

(a) not engage in any matters concerning Alcoa of Australia Ltd ABN 93 004 879 298 and its West Australian operations; and

(b) if he does become aware of any of the plaintiff's confidential information or intellectual property in his possession that he will:

(i) immediately notify the plaintiff;

(ii) await further instructions as to what to do with the material; and

(iii) not use or disclose the material to any person or entity unless otherwise instructed by the plaintiff;

the plaintiff's interlocutory application dated 3 February 2022 is otherwise dismissed.

2. The matter be admitted to Justice Solomon's Commercial and Managed Cases List.

4. The parties confer in relation to the further programming of the matter including mediation pursuant to Pt VI of the Supreme Court Act 1935.

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.

[1] Affidavit of James Jackson (sworn 7 February 2022) par 49.

[2] Affidavit of Giacomo Collica (sworn 1 February 2022) pars 12 - 14.

[3] Affidavit of Giacomo Collica (sworn 1 February 2022) pars 50 - 52.

[4] Affidavit of James Jackson (sworn 7 February 2022) par 91.

[5] Affidavit of Giacomo Collica (sworn 1 February 2022) pars 110 - 119.

[6] Twinside Pty Ltd v Venetian Nominees Pty Ltd [2008] WASC 110.

[7] Smith v Nomad Modular Building Pty Ltd [2007] WASCA 169 [6].

[8] Smith v Nomad Modular Building Pty Ltd [8].

[9] Smith v Nomad Modular Building Pty Ltd [9].

[10] Smith v Nomad Modular Building Pty Ltd [12].

[11] Smith v Nomad Modular Building Pty Ltd [14].

[12] Smith v Nomad Modular Building Pty Ltd [35].

[13] Portal Software International Pty Ltd v Bodworth [2005] NSWSC 1179 [63].

[14] Portal Software International Pty Ltd v Bodworth [64].

[15] Portal Software International Pty Ltd v Bodworth [65].

[16] Portal Software International Pty Ltd v Bodworth [66].

[17] Carter J W, 'Contracts in Restraint of Trade' in Carter J W (eds) Contract Law in Australia (7th ed, 2018) [26-15].

[18] Hughes G, 'Restraint of Trade Covenants and Protection of Goodwill' in Hughes (eds) Dean's Law of Trade Secrets & Privacy (3rd ed, 2018) [100.2500], 581.

[19] Hughes G, 'Restraint of Trade Covenants and Protection of Goodwill' in Hughes (eds) Dean's Law of Trade Secrets & Privacy (3rd ed, 2018) [100.3400], 766.

[20] Smith v Nomad Modular Building Pty Ltd [39].

[21] Smith v Nomad Modular Building Pty Ltd [40].

[22] Idoport Pty Ltd v National Australia Bank Ltd (No 1) [1999] NSWSC 828 [175] - [176].

[23] J Heydon, M Leeming and P Turner, Meagher, Gummow & Lehane's Equity: Doctrines & Remedies (5th ed, 2015) [21-375], 767-8.

[24] Jaddcal Pty Ltd v Minson [2011] WASC 28 [63].

[25] J Heydon, M Leeming and P Turner, Meagher, Gummow & Lehane's Equity: Doctrines & Remedies (5th ed, 2015) [21-375], 768.