First Plaintiff v First Defendant

(a) the first defendant, Mr Paul Sealey (Mr 'Sealey');

(b) the second defendant, Mr Jonathan Vickers-Willis (Mr 'Vickers-Willis');

(c) the third defendant, Terrung Investments Pty Ltd (ACN 163 610 517) as trustee for Sealey Investment Trust ('Terrung');

(d) the fourth defendant, J C Vickers-Willis Pty Ltd (ACN 616 679 102) as trustee for the Vickers-Willis Family Trust ('J C Vickers-Willis'); and

(e) the fifth defendant, Mr William Allen (Mr 'Allen'; together, the 'defendants').

1. In support of their summons the plaintiffs rely upon:

(a) their writ and statement of claim filed 25 September 2023 (the 'Statement of Claim');

(b) an affidavit of Mr Percival Perry ('Perry') sworn 25 September 2023 (the 'First Perry Affidavit'); and

(c) an affidavit of Perry sworn 4 October 2023 (the 'Second Perry Affidavit').

1. In their statement of claim, the plaintiffs relevantly allege that:

(a) Mr Sealey, Mr Vickers-Willis, Terrung and/or J C Vickers-Willis have breached clause 20.2 of the Share Purchase Agreement and, unless restrained by the Court, Mr Sealey and/or Mr Vickers-Willis intend to breach clause 20.2 of the Share Purchase Agreement;[1]

(b) Mr Sealey and/or Mr Vickers-Willis have breached clause 3.2 of the Management Deed and, unless restrained by the Court, intend to breach clause 3.2 of the Management Deed; [2]

(c) Mr Sealey, Mr Vickers-Willis, Terrung and/or J C Vickers-Willis have breached clause 20.2 of the Shareholders Agreement and, unless restrained by the Court, intend to breach clause 20.2 of the Shareholders Agreement; [3]

(d) Mr Sealey and/or Mr Vickers-Willis have breached clauses 2.4, 2.5, 2.6, 13.2, 13.5, and 14.1 of their Employment Agreements and, unless restrained by the Court, intend to breach clause 14.1 of their Employment Agreements;[4] and

(e) Mr Allen has breached clause 14.1 of his Employment Agreement. [5]

1. No interlocutory injunctive relief is sought against Terrung, J C Vickers-Willis or Mr Allen. Only Mr Sealey and Mr Vickers-Willis are the subject of an allegation of intended further breach unless restrained by the Court.
2. Mr Sealey and Mr Vickers-Willis resist the application for an injunction for any duration and submit that the summons should be dismissed with procedural orders made timetabling the matter for trial.[6] They rely on the following material:

(a) the First Perry Affidavit;

(b) an affidavit of Mr Sealey dated 4 October 2023 (the 'Sealey Affidavit');

(c) an affidavit of Mr Vickers-Willis dated 4 October 2023 (the 'Vickers-Willis Affidavit'); and

(d) an affidavit of Mr Allen dated 4 October 2023 (the 'Allen Affidavit').

1. The conclusions reached in this judgment are for the purposes of this interlocutory application only, and do not express a concluded view as to the issues, factual findings or applicable legal principles to be determined at trial. That being said, for the reasons set out below, I have found that the interlocutory application will be refused and the summons dismissed.

1. Since March 2013, Escala has conducted the business of providing financial advisory and wealth management services. Mr Sealey and Mr Vickers-Willis were financial advisers with Escala. Through their respective trusts, Terrung as trustee for Mr Sealey Investment Trust and J C Vickers-Willis as trustee for the Vickers-Willis Family Trust, Mr Sealey and Mr Vickers-Willis were also shareholders in Escala.

1. Focus Financial is in the business of acquiring and overseeing wealth management and related businesses around the globe.[7] Focus Holdings is a wholly owned subsidiary of Focus Financial.[8]
2. On 20 February 2019, Mr Sealey, Mr Vickers-Willis, Terrung, J C Vickers-Willis, Focus Holdings and Focus Financial entered into an agreement with other Principals and Shareholders of Escala by which Focus Holdings agreed to purchase all of the shares in Escala, including the shares held by Terrung and J C Vickers-Willis (the 'Share Purchase Agreement').[9]
3. Pursuant to the Share Purchase Agreement:

(a) Mr Sealey, through Terrung, was paid approximately $4,203,750.77 for his shares in Escala; and

(b) Mr Vickers-Willis, through J C Vickers-Willis, was paid approximately $24,988.85 for his shares in Escala.[10]

1. Clause 20.2 of the Share Purchase Agreement contains a covenant in restraint of trade given by Mr Sealey and Mr Vickers-Willis as Principals to Focus Holdings as the Purchaser which extends up to the fifth anniversary of the completion date to the Share Purchase Agreement, being 31 March 2024.[11] Focus Holdings seeks to enforce that restraint as part of the application for the interlocutory injunction.
2. Clause 20 is in the following terms:

engage in means to carry on, participate in, provide finance or services, or otherwise be directly or indirectly involved as a shareholder, owner, operator, controller, unitholder, director, consultant, adviser, contractor, principal, agent, manager, employee, beneficiary, partner, associate, trustee or financier.

(iii) each Associate of each Vendor and Principal (as applicable).

In this cause 20, a reference to the Business is to the Business as at the Completion Date.

Subject to clause 20.3, each Vendor and Principal (in consideration for the Purchaser entering into this agreement) undertakes to the Purchaser that its relative Prohibited Persons will not:

(a) engage in a business or an activity that is:

(i) the same as, or substantially similar to, the Business or any material part or parts of the Business; or

(ii) in competition with the Business or any material part or parts of the Business;

(a) solicit, canvass, approach or accept an approach from a person who was at any time during the 24 months ending on the Completion Date a customer or client of the Group or the Business with a view to obtaining their custom in a business that is the same or substantially similar to the Business or any material part of it or is in competition with the Business or any material part of it;

(b) interfere with the relationship between the Group or the Business and its customers, clients, employees, or suppliers;

(c) induce or help to induce an Employee to leave their employment;

(e) use a logo, symbol, trade mark or business name which may be misleading or deceptively similar to, or likely to be confused with, a logo, symbol, trade mark or business name owned or used by the Group (including the Business Names and the Trade Marks); or

(f) encourage or induce any other person to do any of the things set out above.

Notwithstanding any other provision in this Agreement:

(a) each Vendor gives the undertakings in clause 20,2 respect of itself and its Associates only;

(b) each Principal gives the undertakings in clause in clause 20.2 in respect of itself and its Associates only; and

(c) the liability of each Vendor or Principal under this clause 20 is several, and not joint or joint and several

The undertakings in clauses 20.2(a) to 20.2(d) and 20.2(f) begin on the Completion Date and end:

(a) on the fifth anniversary of the Completion Date;

(b) on the fourth anniversary of the Completion Date;

(c) on the third anniversary of the Completion Date;

(d) on the second anniversary of the Completion Date;

(e) on the first anniversary of the Completion Date;

The undertakings in clause 20.2 apply only if the activity prohibited by clause 20.2 occurs within:

(a) Australia;

(b) New South Wales, Victoria, Western Australia, Australian Capital Territory and Queensland;

(c) New South Wales, Victoria and Western Australia;

(d) New South Wales and Victoria; or

(e) Sydney and Melbourne.

Clause 20.2, 20.3 and 20.5 have effect together as if they consisted of separate provisions, each being severable from the other. Each separate provision results from combining each undertaking in clause 20.2, with each period in clause 20.3, and combining each of those combinations with each area in clause 20.5. If any of those separate provisions is invalid or unenforceable for any reason, the invalidity or unenforceability does not affect the validity or enforceability of any of the other separate provisions or other combinations of the separate provisions of clause 20.2, clause 20.3 and clause 20.5.

This clause 20 does not restrict a Prohibited Person from:

(a) performing any employment and contractor agreement with the Group or the Management Company;

(b) performing their obligations under the Management Deed;

(c) holding 5% or less of the shares of a company listed on the Stock Exchange;

(d) acting as an authorised representative of the Company.

(a) all the prohibitions and restrictions in this clause 20 are reasonable in the circumstances and necessary to protect the goodwill of the Business;

(b) damages are not an adequate remedy if a Prohibited Person breaches this clause 20;

(c) the Purchaser may apply for injunctive relief if:

(i) a Prohibited Person breaches or threatens to breach this clause 20; or

(ii) it believes a Prohibited Person is likely to breach this clause 20.

1. Mr Sealey, through Terrung, and Mr Vickers-Willis, through J C Vickers-Willis, became shareholders in the first plaintiff, 2nd Chapter Pty Ltd ('2nd Chapter'), which provided management services to Escala following the acquisition by Focus Holdings.[12]
2. On 31 March 2019, 2nd Chapter, Mr Sealey, Mr Vickers-Willis, Terrung and J C Vickers-Willis entered into a shareholders agreement with the other Principals and Shareholders in 2nd Chapter ('Shareholders Agreement').[13]
3. Clause 20.2 of the Shareholders Agreement contains a covenant in restraint of trade given by Mr Sealey and Mr Vickers-Willis among others as Prohibited Persons in favour of 2nd Chapter which extends up to the second anniversary upon which Terrung and J C Vickers-Willis cease being shareholders in 2nd Chapter.[14] 2nd Chapter seeks to enforce that restraint as part of the application for the interlocutory injunction.
4. Clause 20 provides:

(a) Business shall include the Business of Escala as that term is defined in the Management Deed;

(b) engage in means to carry on, participate in, provide finance or services, or otherwise be directly or indirectly involved as a shareholder, owner, operator, controller, unitholder, director, consultant, adviser, contractor, principal, agent, manager, employee, beneficiary, partner, associate, trustee or financier.

(c) Cessation Date means in relation to:

(i) a Shareholder, the date on which that Shareholder ceases to be a Shareholder; and

(ii) a Principal, the date on which that Principal's Controlled Shareholder ceases to be a Shareholder.

(d) Current Restraint Term means in relation to:

(i) each Shareholder, the period from the date that the Shareholder became a party to this Agreement, until the Cessation Date applicable to that Shareholder.

(ii) each Principal, the period from the date that the Principal's Controlled Shareholder became a party to this Agreement, until the Cessation Date applicable to that Principal.

(e) Prohibited Person means (as applicable):

(i) each Shareholder; and

(ii) each Principal.

(f) Solicit includes (without limitation) any mailing, e-mail message, or other verbal or written communication that is sent directly or indirectly to one or more clients of the Company or Escala informing them:

(i) that any Principal is no longer providing services to the Company or to or on behalf of Escala;

(ii) that any Principal plans to no longer provide services to the Company or to or on behalf of Escala; or

(iii) how to contact any Principal in the event that such Principal ceases to provide services to the Company or to or on behalf of Escala, other than any correspondence or communication approved by the Company in writing prior to sending to the clients.

Each Prohibited Person undertakes severally to the Company that it will not and that its respective Associates will not:

(a) engage in a business or an activity that is:

(i) the same or similar to the Business or any material part or parts of the Business; or

(ii) in competition with the Business or any material part or parts of the Business;

(b) during the Current Restraint Term, solicit, canvass, approach or accept an approach from a person who is a client of the Company, Escala or the Business with a view to obtaining their custom in a business that is the same or substantially similar to the Business (or any material part of it) or is in competition with the Business (or any material part of it);

(c) solicit, canvass, approach or accept an approach from a person who was at any time during the 24 months ending on the Cessation Date a client of the Company, Escala or the Business with a view to obtaining their custom in a business that is the same or substantially similar to the Business (or any material part of it) or is in competition with the Business (or any material part of it);

(d) interfere with the relationship between the Company, Escala or the Business and its customers, clients, employees, suppliers or collaboration partners (including by inducing any such person to terminate or modify their relationship with the Company or by making any negative or disparaging statements regarding the Company or Escala);

(e) hire or otherwise engage any employee of the Company, or initiate contact with or directly or indirectly solicit any such employee, with a view to hiring such employee, or induce or otherwise counsel, advise or encourage any such employee to leave their employment with the Company;

(f) use a logo, symbol, trade mark or business name which may be misleading or deceptively similar to, or likely to be confused with, a logo, symbol, trade mark or business name owned or used by the Company or Escala; or

(g) encourage or induce any other person to do any of the things set out in this clause.

The undertakings given by each Prohibited Person in clause 20.2, begin at the commencement of the Current Restraint Term applicable to that Prohibited Person and (unless a contrary intention is expressed in clause 20.2) end:

(a) on the second anniversary of the Cessation Date applicable to that Principal or Shareholder (as applicable);

(b) on the first anniversary of the Cessation Date applicable to that Principal or Shareholder (as applicable).

The undertakings in Section 20.2 apply only if the activity prohibited by clause 20.2 occurs within:

(a) Australia;

(b) New South Wales, Victoria, Western Australia, Australian Capital Territory and Queensland;

(c) New South Wales, Victoria and Western Australia;

(d) New South Wales and Victoria; or

(e) Sydney and Melbourne.

Clause 20.2, clause 20.3 and clause 20.4 have effect together as if they consisted of separate provisions, each being severable from the other. Each separate provision results from combining each undertaking in clause 20.2, with each period in clause 20.3, and combining each of those combinations with each area in clause 20.4. If any of those separate provisions is invalid or unenforceable for any reason, the invalidity or unenforceability does not affect the validity or enforceability of any of the other separate provisions or other combinations of the separate provisions of clause 20.2, clause 20.3 and clause 20.4.

Subject to a Principal complying with its obligations under the Management Deed, this clause 20 does not restrict a Prohibited Person or any of its Associates from:

(a) holding 5% or less of the shares of a company listed on the Stock Exchange;

(b) being an employee of, or contractor to, the Company or Escala;

(c) continuing to participate or be concerned in, or continuing to hold or have any interest that was held by a Prohibited Person or any Associate of a Prohibited Person at the time of execution of this Agreement;

(d) acting as an authorised representative of Escala;

(e) where a Shareholder or Principal is employed by the Company in a role other than as a client advisor or wealth advisor immediately prior to the Cessation Date, providing services substantially similar to the services provided by that Principal or Shareholder (as applicable) to the Company prior to the Cessation Date;

(f) accepting an approach from a client of the Company, Escala or the Business who is an Affiliate, grandparent, aunt, uncle or first cousin of the relevant Prohibited Person; or

(g) conducting any activities that would otherwise be in breach of clause 20.2 but have been approved by the Board.

Each Prohibited Person acknowledges and agrees that:

(a) all the prohibitions and restrictions in this clause 20 are reasonable in the circumstances and necessary to protect the goodwill of the Business, and have served as a critical inducement to the entry by each Shareholder into this Agreement;

(b) damages are not an adequate remedy if a Prohibited Person breaches this clause 20;

(c) the other parties to this Agreement may apply for injunctive relief if:

(i) a Prohibited Person breaches or threatens to breach this clause 20; or

(ii) it has reasonable cause to believe that a Prohibited Person is likely to breach this clause 20; and

(d) the obligations and restrictions imposed upon him or her under this clause 20 are in addition to, and not in lieu of, the obligations and restrictions imposed upon him or her under the Management Deed (if any).

Each Shareholder and Principal acknowledges that in relation to this Agreement and in particular this clause 20, the Shareholder has received legal advice or has had the opportunity of obtaining legal advice.

For the avoidance of any doubt, if any of the separate and independent covenants or restrictions set out in this clause 20 is or becomes invalid or unenforceable for any reason:

(a) clause 28.6 of this Agreement applies; and

(b) without limiting the operation of that clause, if the covenant or restriction in question would be valid or enforceable if any activity was deleted or the area or time was reduced, then the clause must be read down by deleting that activity, or reducing that period or area, to the minimum extent necessary to achieve that result.

20.10 Application to Shareholders subject to Services Agreements

In the event a Shareholder or Principal is subject to a Services Agreement, which imposes less favourable restrictions on the Shareholder or Principal than those set out under this clause 20, then the restrictions in this clause 20 prevail.

1. On 1 April 2019, Mr Sealey, Mr Vickers-Willis, Focus Financial, Escala, 2nd Chapter and the other Principals of 2nd Chapter entered into a deed by which 2nd Chapter agreed to provide management services to Escala ('Management Deed').[15]
2. Clause 3.2 of the Management Deed contains a covenant in restraint of trade given by Mr Sealey and Mr Vickers-Willis among others as Prohibited Persons in favour of Focus Financial and 2nd Chapter which extends up to the second anniversary of the termination of their appointments as an authorised representative.[16] Focus Financial and 2nd Chapter seek to enforce that restraint as part of the application for the interlocutory injunction.
3. Clause 3 provides:

(a) Associate means in relation to a Principal:

(i) a spouse or de facto spouse of that Principal; or

(ii) a company or trust of which the Principal has Control.

(b) engage in means to carry on, participate in, provide finance or services, or otherwise be directly or indirectly involved as a shareholder, owner, operator, controller, unitholder, director, consultant, adviser, contractor, principal, agent, manager, employee, beneficiary, partner, associate, trustee or financier.

(c) Cessation Date means:

(i) in relation to the Management Company, the date on which this Deed expires or is terminated; and

(ii) in relation to a Principal, the date on which person's appointment as an authorised representative of the Company is terminated (by either the Principal or the Company.

(d) Control means:

(e) Current Restraint Term means:

(i) in relation to Management Company, during the term of this Deed; and

(ii) in relation to each Principal, the period from the date of this Deed or (if later) the date on which the Company appoints that person as an authorised representative pursuant to their AR Appointment Deed, until the Cessation Date applicable to that Principal.

(f) Prohibited Person means (as applicable):

(i) the Management Company; and

(ii) each Principal.

(g) Solicit includes (without limitation) any mailing, e-mail message, or other verbal or written communication that is sent directly or indirectly to one or more clients of the Company informing them:

(i) that the Management Company or any Principal is no longer providing services to the Company;

(ii) that the Management Company or any Principal plans to no longer provide services to the Company;

(iii) how to contact that the Management Company or any Principal in the event that that the Management Company or such Principal ceases to provide services to the Company,

other than any correspondence or communication approved by the Company in writing prior to sending to the clients.

Each Prohibited Person undertakes severally to Focus and the Company that it will not (and, in the case of each Principal, that its respective Associates will not):

(a) engage in a business or an activity that is:

(i) the same or similar to the Business or any material part or parts of the Business; or

(ii) in competition with the Business or any material part or parts of the Business;

(b) during the Current Restraint Term, solicit, canvass, approach or accept an approach from a person who is a client of the Company or the Business with a view to obtaining their custom in a business that is the same or substantially similar to the Business (or any material part of it) or is in competition with the Business (or any material part of it);

(c) solicit, canvass, approach or accept an approach from a person who was at any time during the 24 months ending on the Cessation Date a client of the Company or the Business with a view to obtaining their custom in a business that is the same or substantially similar to the Business (or any material part of it) or is in competition with the Business (or any material part of it);

(d) interfere with the relationship between the Company or the Business and its customers, clients, employees, suppliers or collaboration partners (including by inducing any such person to terminate or modify their relationship with the Company or by making any negative or disparaging statements regarding the Company or any Affiliated Company);

(e) hire or otherwise engage any employee of the Company, or initiate contact with or directly or indirectly solicit any such employee, with a view to hiring such employee, or induce or otherwise counsel, advise or encourage any such employee to leave their employment with the Company;

(f) in respect of a Principal only, hire or otherwise engage any employee of the Management Company, or initiate contact with or directly or indirectly solicit any such employee, with a view to hiring such employee, or induce or otherwise counsel, advise or encourage any such employee to leave their employment with the Management Company;

(g) use a logo, symbol, trade mark or business name which may be misleading or deceptively similar to, or likely to be confused with, a logo, symbol, trade mark or business name owned or used by the Company; or

(g) encourage or induce any other person to do any of the things set out in this clause.

3.3 Duration of prohibition in relation to the Management Company

3.4 Duration of prohibition in relation to each Principal

The undertakings given by each Principal in Section 3.2 begin at the commencement of the Current Restraint Term applicable to that Principal and (unless a contrary intention is expressed in Section 3.2) end:

(a) on the second anniversary of the Cessation Date applicable to that Principal;

(b) on the first anniversary of the Cessation Date applicable to that Principal.

The undertakings in Section 3.2 apply only if the activity prohibited by Section 3.2 occurs within:

(a) Australia;

(b) New South Wales, Victoria, Western Australia, Australian Capital Territory and Queensland;

(c) New South Wales, Victoria and Western Australia;

(d) New South Wales and Victoria; or

(e) Sydney and Melbourne.

Section 3.2, Section 3.3 or Section 3.4 (as applicable) and Section 3.5 have effect together as if they consisted of separate provisions, each being severable from the other. Each separate provision results from combining each undertaking in Section 3.2, with each period in Section 3.3 or Section 3.4 (as applicable),and combining each of those combinations with each area in Section 3.5. If any of those separate provisions is invalid or unenforceable for any reason, the invalidity or unenforceability does not affect the validity or enforceability of any of the other separate provisions or other combinations of the separate provisions of Section 3.2, Section 3.3 or Section 3.4 (as applicable) and Section 3.5.

This Article 3 does not restrict a Prohibited Person from:

(a) holding 5% or less of the shares of a listed company;

(b) being an employee of, or contractor to, the Company or the Management Company; or

(c) acting as an authorised representative of the Company.

Each Prohibited Person acknowledges and agrees that:

(a) the Company owns the servicing rights and any entitlement to remuneration referable to clients of the Business ("Servicing Rights and Fee Entitlement"), and, with the exception of the Management Fee payable under this Deed, neither the Management Company nor any of the Principals have any right, title, claim or interest in the Servicing Rights and Fee Entitlement;

(b) Focus and the Company have entered into this Deed at the request of the Principal;

(c) all the prohibitions and restrictions in this Article 3 are reasonable in the circumstances and necessary to protect the goodwill of the Business, and have served as a critical inducement to the entry by Focus and the Company into this Deed;

(d) damages are not an adequate remedy if a Prohibited Person breaches this Article 3;

(e) the Company and Focus may apply for injunctive relief if:

(i) a Prohibited Person breaches or threatens to breach this Article 3; or

(ii) it has reasonable cause to believe that a Prohibited Person is likely to breach this Article 3; and

(f) the obligations and restrictions imposed upon him or her under this Article 3 are in addition to, and not in lieu of, the obligations and restrictions imposed upon him or her under the Purchase Agreement.

1. Mr Sealey and Mr Vickers-Willis entered into employment agreements with 2nd Chapter on 21 and 29 March 2019 respectively ('Employment Agreements').[17]
2. Clause 14.1 of each of the Employment Agreements contains a covenant in restraint of trade given by Mr Sealey and Mr Vickers-Willis in favour of 2nd Chapter which extends up to twelve months from the date of termination of their employment.[18] 2nd Chapter seeks to enforce that restraint as part of the application for the interlocutory injunction. In consideration for the restraint covenants (among other things):

(a) in the 12 months to 30 June 2023, each of Mr Vickers-Willis and Mr Sealey have been paid $599,325;[19]

(b) thus far, from 1 July 2023 to 14 September 2023 each of Mr Vickers-Willis and Mr Sealey have been paid $112,500.[20]

14.1 In consideration of this agreement and the payments to you referred to in clause 7 which are greater than those payable to at law, you agree that you will not, and will ensure that your Affiliates do not, during the Restraint Period and in the Restraint Area, directly or indirectly, on your or their own behalf or on behalf of any other person or entity, in any capacity:

• solicit, canvas, approach, encourage, entice, or assist any person or entity who at any time during the period of 12 months preceding the termination of your employment was a client of the Company or Escala, to cease doing business with Escala or the Company, or reduce the amount of business the client may or would conduct with Escala or the Company, or alter the terms of the client's dealings with Escala or the Company;
• assist another person or entity to solicit, canvas, approach, encourage, entice, or assist any person or entity who, at any time during the period of 12 months preceding the date of termination of your employment, was a client of Escala or the Company, to cease doing business with Escala or the Company, or reduce the amount of business the client may or would conduct with Escala or the Company, or alter the terms of the client's dealings with Escala or the Company;
• do or say anything harmful to the reputation of Escala or the Company or which may lead a person or entity to cease, curtail or alter the terms of their dealings with Escala or the Company;
• accept any approach from any person or entity who, at any time during the period of 12 months preceding the date of termination of your employment, was a client of Escala or the Company with a view to obtain the custom of that client in a business that is the same or as similar to any part or parts of the business of Escala or the Company;
• not interfere with the relationship between any employee, or member of Escala or the Company and any of their clients; and
• not solicit, encourage, entice, assist (including assisting any other person or entity to do so) any individual/s to leave their employment with Escala or the Company.

14.2 Restraint Period means each of the periods described below separately:

• Twelve (12) months; if that is not enforceable, then
• Nine (9) months; if that is not enforceable, then
• Six (6) months; if that is not enforceable, then
• Three (3) months.

14.3 Restraint Area means each of the areas described below, separately:

• Australia; or if that is unenforceable;
• the state of Victoria; or if that is unenforceable,
• the city of Melbourne in Victoria, including all surrounding suburbs.

14.4 Each of the Restraints in clause 14.1 (which result from the differing combinations of the Restraint Period and Restraint Area) is a separate, severable and independent Restraint from the other Restraints and obligations imposed (although they are cumulative in effect). You agree that it is the intention that you will be bound by each Restraint for the maximum Restraint Period and Restraint Area permitted by law.

Departure of Mr Sealey, Mr Vickers-Willis and Escala's clients

1. Mr Sealey, Mr Vickers-Willis and the fifth defendant, Mr Allen, previously worked together as part of the same team, with Mr Allen working under and at the direction of Mr Sealey and Mr Vickers-Willis.[21]
2. On 20 December 2022, Mr Allen tendered his resignation as an employee of 2nd Chapter and subsequently commenced employment with LGT Crestone Wealth Management Ltd ('LGT Crestone'), which provides financial advisory and wealth management services in competition with Escala.[22] Mr Allen's contract of employment contained a non-compete period of up to 6 months,[23] and a covenant in restraint of trade of up to 12 months.[24]
3. On 20 June 2023, precisely six months after Mr Allen's resignation (being the date of the expiry of Mr Allen's non-compete period), Mr Sealey and Mr Vickers-Willis gave notice of their intention to resign as employees and shareholders of 2nd Chapter.[25]
4. Since Mr Sealey and Mr Vickers-Willis gave notice of their intention to resign, a number of their clients with Escala have requested to transfer their business to LGT Crestone and to Mr Allen in particular.[26] The plaintiffs assert that in the ten years prior to Mr Sealey and Mr Vickers-Willis giving notice of their intention to resign, none of Escala's clients had requested to transfer their business to LGT Crestone.[27] From these facts, the plaintiffs assert that an inference may be drawn that that Mr Sealey and Mr Vickers-Willis have solicited their former clients to transfer their business from Escala to Mr Allen (the comparatively junior staff member who worked under their supervision) at LGT Crestone.
5. On 18 September 2023, the Australian Financial Review published an article stating that Mr Sealey, Mr Vickers-Willis and Mr Allen had 'decamped' from Escala to LGT Crestone.[28]
6. On 28 September 2023, the solicitors for the defendants confirmed that Mr Vickers-Willis had intended to commence work at LGT Crestone on 2 October 2023 but, in light of the commencement of this proceeding, intends to commence work at LGT Crestone on 9 October 2023 subject to any relevant order of the Court.[29]
7. In response to an inquiry about the article in the Financial Review and in reply to a direct question asking whether or not he intends to commence employment at LGT Crestone, Mr Sealey did not deny that he intends to do so, but stated that he 'has no agreed commencement date but reserves all of his rights'.[30]

1. The principles relevant to the grant of an interlocutory injunction were not in dispute. Whether to grant interlocutory injunctive relief is a matter of discretion. In the exercise of that discretion, the Court needs to be satisfied:

(1) first, that there is a serious question to be tried. This involves consideration as to whether the plaintiffs have made out a prima facie case, in the sense that if the evidence remains as it is there is a probability that at the trial of the proceeding the plaintiffs will be held entitled to relief; and

(2) secondly, that the balance of convenience favours granting the injunction. This involves consideration as to whether the inconvenience or injury which the plaintiffs would likely suffer if an injunction were refused would outweigh or is outweighed by the inconvenience or injury which the relevant defendants would likely suffer if an injunction were granted.[31] As an additional (or integral) requirement, the plaintiffs must usually demonstrate that damages will not be an adequate remedy for the loss they will suffer if an interlocutory injunction is not granted.

1. In determining whether there is a serious question to be tried, the need to make out a 'prima facie case' does not require the plaintiffs to show that it is more probable than not that they will succeed at trial. It is sufficient that the plaintiffs show a 'sufficient likelihood of success' to justify in the circumstances the preservation of the status quo pending the trial.[32]
2. There is a relationship between the first and second enquiries. How strong the balance of probability needs to be depends upon the nature of the right that the plaintiffs assert and the practical consequences likely to flow from the relief sought.[33] The Court will be more inclined to grant an interlocutory injunction that will have serious practical effects for the defendant where the plaintiff has demonstrated strong prospects of success. The Court should take whichever course appears to carry the lower risk of injustice if it should turn out to have been 'wrong', in the sense of granting an injunction to a party which failed to establish its right at trial, or in failing to grant an injunction to a party who succeeded at trial.[34]
3. Further, where relief at an interlocutory level would effectively entitle the plaintiff to the final relief it seeks in the proceedings, a higher onus rests on the plaintiff and the plaintiff must show more than a serious issue to be tried. In such cases, the Court may embark on an assessment of the merits and strength of the plaintiff's case.[35]

1. The principles relevant to the enforcement of covenants in restraint of trade were recently summarised by the Court of Appeal in Kingdom Animalia LLC v Mecca Brands Pty Ltd in these terms:[36]

The applicable principles are well established and were not in dispute. Stated shortly:

(a) where an agreement contains a covenant which restrains one party from freely engaging in trade in respect of its products or services, the party receiving the benefit of the covenant carries an onus to justify the restraint;

(b) to do so, the covenantee must demonstrate that the restraint is reasonable in reference to the interests of both parties and the public, in the sense that it affords not more than adequate protection of its legitimate interests; and

(c) the time of assessing reasonableness is the date of entry into the restraint.

1. The law draws a distinction between employee covenants and goodwill covenants and is more willing to enforce the latter. In Just Group Ltd v Peck,[37] the Court of Appeal stated:

A term in a contract, which is a restraint of trade ('a restraint clause'), is presumed to be void as contrary to public policy.

The presumption may be rebutted if there are special circumstances that demonstrate the covenant to be:

(a) reasonable as between the parties; and

(b) not unreasonable in the public interest.

The test of reasonableness varies depending on 'the situation the parties occupy and so recognising different considerations which affect employer and employee and independent traders or business men, particularly vendor and purchaser of the goodwill of a business'. A court takes a 'stricter view' of restraint clauses in employment contracts; and will more readily uphold a restraint clause in favour of a purchaser of the goodwill of a business than a restraint clause in favour of an employer. In particular, a purchaser of a business is entitled to protect itself from competition by the vendor; but an employer is not entitled to protect itself from competition per se by an employee.

A restraint clause in favour of an employer will be reasonable as between the parties, if at the date of a contract:

(a) the restraint clause is imposed to protect a legitimate interest of the employer; and

(b) the restraint clause does no more than is reasonably necessary to protect that legitimate interest in its:

(i) duration; or

(ii) extent.

It is well established that employers do have a legitimate interest in protecting:

(a) confidential information and trade secrets; and

(b) the employer's customer connections.

For the legitimate purpose of protecting the employer' confidential information, a restraint clause does not need to be limited to a covenant against disclosing confidential information. It may restrain the employee from being involved with a competitive business that could use the confidential information.

The onus of proving the special circumstances from which the Court may infer 'reasonableness between the parties' is on the person seeking to enforce the covenant. However, if an employee or other covenantor alleges that the restraint clause is against the public interest, the burden of proving that proposition is on the employee/covenantor.

Once the facts that are contended to constitute the special circumstances have been established, it is a matter of law whether the restraint clause is reasonable as between the parties. ...[38]

1. The exercise of construing a restraint of trade clause is undertaken for the purpose of ascertaining the real meaning of the restraint, independently of the rules prescribing tests of reasonableness for the purpose of ascertaining the validity of a covenant in restraint of trade.[39]
2. The application of the relevant principles to contracts of sale differ in certain respects from that adopted when considering a contract of employment.
3. In Butt v Long,[40] Dixon CJ identified the characteristics distinguishing the purchaser of the goodwill of a business from that of an employer seeking to restrain competitive activity by an employee. His Honour said:

A distinction is drawn between the position of the purchaser of the goodwill of a business taking a covenant in restraint of trade from his vendor and the case of the owner of a business taking such a covenant from his servant or apprentice. The goodwill of a business is immune from the danger of the owner exercising his personal knowledge and skill to its detriment and if the purchaser is to take over such goodwill with all its advantages it must in his hands remain similarly immune. Without, therefore, a covenant on the part of the vendor against competition, a purchaser would not get what he is contracting to buy, nor could the vendor give what he is intending to sell. The covenant against competition is therefore reasonable if confined to the area within which it would in all probability enure to the injury of the purchaser - per Lord Parker of Waddington (Herbert Morris Ltd. v. Saxelby (3)).[41]

1. The test of the reasonableness of a goodwill covenant therefore focuses upon what is necessary to protect the goodwill in the business which has been sold.[42]
2. The relevant questions are whether the trade restrained is unduly wide, whether the area or scope of the restraint is unduly wide, and whether the restraint is unduly long.[43] On this last question, when speaking about the duration of a goodwill covenant, Heydon has said that the test for duration 'ought to depend on however long it will take for the seller's connection with the customers to fade away or for the purchaser to secure a firm connection [with] the customers' and that 'the duration of the seller's promise should not extend beyond the point in time at which the seller's re-entry into the business would not affect the buyer any more than the entry of a stranger'.[44]

D Serious question to be tried - Prima facie case

1. The plaintiffs submitted that they had established a prima facie case in respect of the enforceability of the restraints contained in all of the agreements. They submitted that:

The plaintiffs have a legitimate interest in protecting the goodwill of the business which was acquired from Mr Sealey and Mr Vickers-Willis through Turrong and J C Vickers-Willis which they then sought to establish through the Share Purchase Agreement, Shareholders Agreement, Management Deed and Employment Agreements.

The covenants in restraint of trade are also reasonable in the circumstances. Mr Sealey has been a financial adviser with Escala since April 2013 and Mr Vickers-Willis since February 2015. The plaintiffs have made a considerable investment in acquiring the Escala business in Australia. Mr Sealey in particular has received substantial compensation through Turrong for his shares in Escala. Both Mr Sealey and Mr Vicker-Willis have subsequently been well remunerated under their Employment Agreements with 2nd Chapter. Moreover, Mr Sealey and Mr Vickers-Willis remain shareholders in 2nd Chapter.

The restraints in the Share Purchase Agreement, the Shareholders Agreement, the Management Deed, and the Employment Agreement contain the usual 'waterfall' in terms of duration and geography. For example, the restrictive covenant in the Management Deed is expressed to extend until the second, alternatively first, anniversary of the termination of Mr Sealey and Mr Vickers-Willis as authorised representatives of Escala. The plaintiffs will co-operate to ensure an early hearing in this matter, if it were to be considered that the more onerous aspects of some of the restrictive covenants might be unenforceable, so as to allow the matter to be concluded prior to their expiry.

There is sufficient evidence that Mr Sealey and Mr Vickers-Willis have and will continue to breach the restraints in each of the agreements unless an injunction is ordered. For the purposes of granting an interim injunction, the clear inference from the evidence is that following their notice of resignation Mr Sealey and Mr Vickers-Willis have solicited their former clients with Escala to move their business to LGT Crestone. Mr Vickers-Willis has confirmed that he intends to commence employment with LGT Crestone unless the injunction is granted.[45]

1. The defendants directed their submissions to each individual agreement. They contended that there was no serious question to be tried in respect of any of the agreements for the following reasons.

1. In respect of the Share Purchase Agreement, the defendants submitted that:

(a) the restraints are prime facie void and unenforceable;

(b) the plaintiffs must establish that the restraints are valid and enforceable for five years as it has already been 4 ½ years since the Completion Date;

(c) five years is an excessive period of time for any restraint;

(d) the restraints would purport to prohibit a Principal from being employed by a competitor, even if the Principal was to have no involvement with current or former clients of the Group in their new role;

(e) Mr Vickers-Willis received a total of $24,988.85 for his 0.0335% shareholding which on any measure was inadequate compensation in exchange for the restraints;

(f) even though Mr Sealey received a total of $4,203,750.77 for his 6.2188% shareholding, other Principals received considerably more for their larger shareholdings yet the restraints apply to every Principal without discrimination;

(g) the restraints could operate to prevent a Principal in February 2024 from accepting an approach from a person who stopped being a customer or client of the Group in April 2017;

(h) the restraints apply to 'a customer or client' of Escala. But that person might have had no dealings with the Principal; and

(i) the restraints are unreasonable in the public interest because they prevent high net-worth individuals and families from moving their business to the employee's new firm, no matter the reason.

1. In respect of the Shareholders Agreement, the defendants submitted that:

(a) the restraints are prime facie void and unenforceable;

(b) the Shareholders Agreement is not an instrument that gave effect to the sale of goodwill from the owners of Escala to Focus. Rather, the Shareholders Agreement purports to fasten a restraint on a shareholder following a buy-back of his shares by 2nd Chapter;

(c) the length of the restraints need to be assessed in the context of the Buy Back Period with the result that it was possible that the Cessation Date would not commence until the end of the Buy Back Period, which could be up to 24 months after the termination of the Employment Agreement;

(d) the restraints have the potential to stop the shareholder from being employed in their chosen field for a period of up to four years, which might be two years after the shareholder's employment has come to an end;

(e) the shareholders receive no premium for their shares in exchange for the restraints. They receive market value or less than market value if thay are deemed to be a "Bad Leaver";

(f) the shareholders do not receive any other form of compensation for the period of the restraints;

(g) the restraints would purport to prohibit the shareholder from being employed by a competitor, even if the shareholder was to have no involvement with current or former clients of Escala in their new role;

(h) the restraints are unreasonable in the public interest because they prevent high net-worth individuals and families from moving their business to the employee's new firm, no matter the reason.

1. In respect of the Management Deed, the defendants submitted that:

(a) the restraint is prima facie void and unenforceable;

(b) the restraint does not permit Mr Sealey or Mr Vickers-Willis to 'engage in' a business or activity in competition with the business of the Plaintiffs where the expression 'engage in' is broadly defined and includes having a shareholding (of any size) in an unlisted company or being a beneficiary or unit holder of a trust, or indirectly providing finance (in any amount);

(c) the restraint runs to the second or first anniversary of the Cessation Date, which is the date on which the Principal's appointment as an Authorised Representative is terminated;

(d) two years or even one year is a restraint of unreasonable duration, especially in circumstances where the Principals receive no compensation under the Management Deed;

(e) the restraint would purport to prohibit the Principals from being employed by a competitor, even if the Principal was to have no involvement with current or former clients of Escala in their new role;

(f) the restraint applies to "a client" of Escala. But that client might have had no dealings with the Principal. Further still, that client might have retained Escala during the Current Restraint Term, but nevertheless after the Principal had ceased being an Authorised Representative;

(g) the extent of the restraint is also not reasonable because it prohibits solicitation, which is defined to include written communications that are sent indirectly to clients informing them that the Principal is no longer providing services for Escala and/or containing their contact details;

(h) the restraint is unreasonable in the public interest because they prevent high net-worth individuals and families from moving their business to the employee's new firm, no matter the reason.

1. In respect of the Employment Agreements, the defendants submitted that:

(a) the restraints are prima facie void and unenforceable;

(b) the restraints are unenforceable because the Employment Agreements have been terminated;

(c) there is no nominated commencement date for the Restraint Period and if the Restraint Period began on the date the Employment Agreement was signed, it therefore expired no later than March 2020;

(d) the restraints prohibit the employee from, among other things, approaching any person who was a client of Escala at any time during the 12 months preceding the termination and has the potential to prohibit the employee from merely speaking to a client of Escala about their new role.;

(e) the extent of the restraints is unreasonable because they apply to any "client" of Escala, even if that client had no dealings with the employee;

(f) the extent of the restraints is also unreasonable insofar as it applies to former clients of Escala because they have the potential to prevent the employee approaching a client who had long since left Escala of their own accord; and

(g) the restraints are unreasonable in the public interest because they prevent high net-worth individuals and families from moving their business to the employee's new firm, no matter the reason.

1. For the reasons that follow I do not consider that the Plaintiffs have demonstrated a sufficient likelihood of success to justify the preservation of the status quo pending trial. I do not consider that the Plaintiffs have demonstrated that there is a serious question to be tried concerning the enforceability of the restraints contained in any of the four agreements. Further, the fact that the restraints contained in the various agreements operate in different circumstances, for different periods of time and not in a consistent and coherent manner reinforces my conclusions that they are not reasonable and therefore unenforceable.

1. While a Court will more readily uphold a restraint clause in favour of a purchaser of the goodwill of a business than a restraint clause in favour of an employer, for the following reasons, I do not consider that there is a serious question to be tried that the restraints contained in clause 20.2 of the Share Purchase Agreement are valid and enforceable for a period of 5 years from the Completion Date of 31 March 2019.
2. First, the restraints are presumed to be void and unenforceable unless they are reasonable in the interests of the parties and the public.
3. Secondly, the restraints are not reasonable as between the parties to the Share Purchase Agreement because, even if the least restrictive geographical area is adopted (i.e. Sydney and Melbourne only):

(a) the restraints are expressed to apply equally to each Vendor or Principal regardless of the number of shares sold or the consideration received by each Vendor or Principal. Mr Vickers-Willis through JC Vickers-Willis, received $24,988.85 for a .0335% shareholding while Mr Sealey, through Terrung, received $4,203,750.77 for a 6.2188% shareholding. There were a further 17 Vendors/Principals, six of whom had shareholdings of 12.2435%. Despite the substantial variation in the number of shares sold or the consideration received, each Vendor or Principal was subject to the same restraints without discrimination;

(b) the restraints purport to prohibit a Principal from being employed by a competitor even if the Principal was to have no involvement with current or former clients of Escala in their new position;

(c) the restraint applies to any current client of Escala, irrespective of whether that client had any prior dealings with Mr Sealey or Mr Vickers-Willis. This is significant as the evidence was that Mr Sealey and Mr Vickers-Willis dealt with no more than 13% of Escala's total current clients. As the Court of Appeal said in Wallis Nominees (Computing) Pty Ltd v Pickett,[46] it is less likely that a restraint will be found to be reasonable if it relates to customers whom the employee did not deal with;

(d) the restraints refer to any person who was a customer or client of Escala at any time during the period 24 months before the Completion Date. This would mean that the restraints could operate to prevent a Principal in February 2024 from accepting an approach from a person who ceased being a customer or client of Escala in April 2017;

(e) the restraints do not allow Mr Sealey or Mr Vickers-Willis to 'engage in' a business or activity in competition with the business of the Plaintiffs. The expression 'engage in' is broadly defined and includes having a shareholding (of any size) in an unlisted company or being a beneficiary or unit holder of a trust, or indirectly providing finance (in any amount). Thus, although Mr Sealey or Mr Vickers-Willis would have no day to day involvement in or influence over a competing company, they would be caught by the restraint.

1. Thirdly, the restraints are unreasonable in the public interest as they would have the effect of preventing clients or former clients of Escala from taking their business to LGT Crestone for any reason, including if the client was concerned about the quality of Escala's performance or had lost trust and confidence in Escala.

1. I accept the Defendants' submission that the Shareholders' Agreement is not an instrument that gave effect to the sale of the goodwill in the Escala business, but is an instrument regulating the affairs of 2nd Chapter. Clause 20.2 of the Shareholders' Agreement purports to restrain a shareholder or their Principal from engaging in certain conduct following a buy-back of their shares by 2nd Chapter. In the circumstances, I consider that a stricter view of any restraint clause should be taken by the Court.[47]
2. For the following reasons, I do not consider that there is a serious question to be tried concerning the enforceability of the restraints contained in clause 20.2 of the Shareholders Agreement.
3. First, the restraints are presumed to be void and unenforceable unless they are reasonable in the interests of the parties and the public.
4. Secondly, the restraints are not reasonable as between the parties to the Shareholders Agreement because, even if the least restrictive geographical area is adopted (i.e. Sydney and Melbourne only):

(a) the restraints run to the first or second anniversary of the Cessation Date. The Cessation Date might not commence until the end of the Buy Back Period which is defined to mean the period commencing on the Departure Date and ending 24 months later. Accordingly, the restraints could run as long as 3 or 4 years after an employee's employment has come to an end which I consider an unreasonably long time, especially considering that any restraint period in the employment agreement may have expired by then;

(b) the shareholders received no premium for their shares in exchange for the restraint or other form of compensation for the period of the restraint;

(c) the restraint applies to any current client of Escala, irrespective of whether that client had any prior dealings with Mr Sealey or Mr Vickers-Willis.[48] Further, that client may have been retained during the Restraint Period, but after an employee's employment has come to an end;

(d) the restraints do not allow Mr Sealey or Mr Vickers-Willis to 'engage in' a business or activity in competition with the business of the Plaintiffs. The expression 'engage in' is broadly defined and includes having a shareholding (of any size) in an unlisted company or being a beneficiary or unit holder of a trust, or indirectly providing finance (in any amount). Thus, although Mr Sealey or Mr Vickers-Willis would have no day-to-day involvement in or influence over a competing company, they would be caught by the restraint.

1. Thirdly, the restraints are unreasonable in the public interest as they would have the effect of preventing clients or former clients of Escala from taking their business to LCT Crestone for any reason, including if the client was concerned about the quality of Escala's performance or had lost trust and confidence in Escala.

1. For the following reasons, I do not consider that there is a serious question to be tried concerning the enforceability of the restraints contained in clause 3.2 of the Management Deed.
2. First, the restraints are presumed to be void and unenforceable unless they are reasonable in the interests of the parties and the public.
3. Secondly, the restraints are not reasonable as between the parties to the Management Deed because, even if the least restrictive geographical area is adopted (ie. Sydney and Melbourne only):

(a) the restraints run to the first or second anniversary of the Cessation Date. The Cessation Date is, in relation to a Principal (such as Mr Sealey or Vicker-Willis), the date on which the person's appointment as an authorised representative of the Company is terminated. The Cessation Date is a date determined by the Company. There is no evidence about when such appointment may be terminated and in what circumstances. Further, such date might not coincide with the termination of a Principal's employment;

(b) the restraints purport to prohibit a Principal from being employed by a competitor even if the Principal was to have no involvement with current or former clients of Escala in their new position;

(c) the restraint applies to any current client of Escala, irrespective of whether that client had any prior dealings with Mr Sealey or Mr Vickers-Willis.[49] Further, that client may have retained Escala during the Current Restraint Term, but after the Principal had ceased to be an Authorised Representative;

(d) the Principals receive no compensation for the period of the restraint; and

(e) the restraints do not allow Mr Sealey or Mr Vickers-Willis to 'engage in' a business or activity in competition with the business of the Plaintiffs. The expression 'engage in' is broadly defined and includes having a shareholding (of any size) in an unlisted company or being a beneficiary or unit holder of a trust, or indirectly providing finance (in any amount). Thus, although Mr Sealey or Mr Vickers-Willis would have no day to day involvement in or influence over a competing company, they would be caught by the restraint.

1. Thirdly, the restraints are unreasonable in the public interest as they would have the effect of preventing clients or former clients of Escala from taking their business to LGT Crestone for any reason, including if the client was concerned about the quality of Escala's performance or had lost trust and confidence in Escala.

1. For the following reasons, I do not consider that there is a serious question to be tried concerning the enforceability of the restraints contained in clause 14.1 of the employment agreements. I have taken into account that a Court will take a 'stricter view' of restraint clauses in employment contracts.
2. First, the restraints are presumed to be void and unenforceable unless they are reasonable in the interests of the parties and the public.
3. Secondly, the restraints are not reasonable as between the parties to the employment agreements because, even if the least restrictive geographical area is adopted (i.e.. Sydney and Melbourne only):

(a) there is no nominated commencement date for the Restraint Period;

(b) the restraint applies to any current client of Escala, irrespective of whether that client had any prior dealings with Mr Sealey or Mr Vickers-Willis. [50]; and

(c) the restraint applies to any former client of Escala, so would prevent Mr Sealey and Mr Vickers-Willis from approaching a client who had long since left Escala of its own accord.

1. Thirdly, the restraints are unreasonable in the public interest as they would have the effect of preventing clients or former clients of Escala from taking their business to LGT Crestone for any reason, including if the client was concerned about the quality of Escala's performance or had lost trust and confidence in Escala.
2. Fourthly, it is doubtful that the restraints survive the termination of the employment agreements. Unlike clause 13.7 which provides that the restraints continue to apply if the agreement is terminated summarily, there is no provision that the restraints continue to apply where the agreement is terminated on notice.

1. Since I do not consider that the plaintiffs have established that there is a serious question to be tried in respect of the enforceability of the restraints in any of the relevant agreements, it is not strictly necessary for me to consider the balance of convenience.
2. Nonetheless, I consider that the balance of convenience weighs against the grant of an interlocutory injunction.
3. If following a final hearing it is found that such an injunction ought to have been granted, I consider that damages are likely to be an adequate remedy for the plaintiffs. In that event, the plaintiffs would be able to ascertain which of its clients had moved their business to LGT Crestone during the period of the restraints with a view to determining the fees it would have received from those clients if they had remained with the plaintiffs during that time. The fact that the plaintiffs have elected only to seek damages and not injunctive relief against Mr Allen suggests that they regard damages as an adequate remedy so far as he is concerned.
4. By contrast, if an injunction was granted, Mr Sealey and Mr Vickers-Willis will be unable to work in their chosen profession and their families will be without an income. They have monthly expenses of $30,000-$40,000 and $24,000 and respectively. Any continuing restraint would be uncompensated. They have not worked for 3 months and 2nd Chapter has refused to pay them for their full notice period and has sought to reduce their employee entitlements. In view of the matters referred to in these reasons and given that the hearing and determination of the proceeding might not take place until next year, I consider that refusal of interlocutory injunctive relief carries the lower risk of injustice.

(a) The plaintiffs' application for interlocutory injunctions is refused.

(b) The plaintiffs' summons filed 27 September 2023 is dismissed.

(c) The proceeding is adjourned to a directions hearing on 20 October 2023.

1. The usual rule when a plaintiff fails on an application for interlocutory relief is that costs follow the event, but there may be circumstances of which I am unaware that would displace the usual rule. I will deal with the question of costs and what further directions should be made in the proceeding at the directions hearing on 20 October 2023.

[6] Defendants' Outline of Submissions dated 4 October 2023, [4]-[5].

[11] Exhibits to First Perry Affidavit, 232.

[14] Exhibits to First Perry Affidavit, 403.

[16] Exhibits to First Perry Affidavit, 460.

[17] First Perry Affidavit, [24], [26].

[18] Exhibits to First Perry Affidavit, 460.

[19] Second Perry Affidavit, [5]; Exhibits to Second Perry Affidavit, 1-2. These amounts are gross figures, before tax.

[20] Second Perry Affidavit, [6]; Exhibits to Second Perry Affidavit, 3-4. These amounts are gross figures, before tax.

[23] Exhibits to First Perry Affidavit, 335.

[25] First Perry Affidavit, [37]-[38].

[28] Exhibits to First Perry Affidavit [75].

[29] Second Perry Affidavit [9]; Exhibits to Second Perry Affidavit, 14.

[30] Second Perry Affidavit [10]; Exhibits to Second Perry Affidavit, 15-16.

[31] Australian Broadcasting Corporation v O'Neill [2006] HCA 46; (2006) 227 CLR 57 (Gleeson CJ, Gummow, Kirby, Hayne, Heydon & Crennan JJ) at 82 [65] ('O'Neill'); Wombat Forestcare Inc v VicForests [2023] VSC 582 (Richards J) at [19] ('Wombat Forestcare Inc').

[32] Transonic Travel Pty Ltd v Tilakee Nominees Pty Ltd [2021] VSC 413 (Nichols J) at [11] ('Transonic').

[33] O'Neill [2006] HCA 46; (2006) 227 CLR 57 at 82 [65].

[34] Wombat Forestcare Inc [2023] VSC 582 at [20]- [21]; Transonic [2021] VSC 413 at [11]; Bradto Pty Ltd v State of Victoria [2006] VSCA 89; (2006) 15 VR 65 (Maxwell P & Charles JA) at [35].

[35] Werribee Football Club v Tattersalls Gaming Pty Ltd [2005] VSC 144 (Kaye J) at [18]; Hartleys Limited v Martin [2002] VSC 301 (Gillard J) at [32]-[37]; Cayne v Global Natural Resources Pty Ltd [1984] 1 ALL E.R. (Eveleigh, Kerr & May LJJ) at 225.

[36] (2023) 170 IPR 399; [2023] VSCA 55 (Niall, Sifris & Macaulay JJA) at [21].

[37] [2016] VSCA 334; (2016) 344 ALR 162 (Beach & Ferguson JJA, Riordan AJA) ('Just Group').

[39] Findex Group Ltd v McKay [2020] FCAFC 182 (Markovic, Banks-Smith & Anderson JJ) at [76].

[40] [1953] HCA 76; (1953) 88 CLR 476.

[41] Butt v Long [1953] HCA 76; (1953) 88 CLR 476 at 486.

[42] Southern Cross Computer Systems Pty Ltd v Palmer (No 2) [2017] VSC 460 (McDonald J) at [8].

[43] J D Heydon, The Restraint of Trade Doctrine (3rd edition), 202.

[45] Plaintiffs Outline of Submissions dated 4 October 2023, [26]-[36].

[46] [2013] VSCA 24 (Warren CJ, Redlich JA & Davies AJA) at [53].

[47] Popham Holdings Pty Ltd v Franklin [2016] VSC 597 (Elliot J) at [99]-[101].

[48] See paragraph [53(c)] above.

[49] See paragraph [53(c)] above.

[50] See paragraph [53(c)] above.