Isaac v Dargan Financial Pty Ltd ATF The Dargan Financial Discretionary Trust - [2018] NSWCA 163 - NSWCA 2018 case summary — Zoe

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Isaac v Dargan Financial Pty Ltd ATF The Dargan Financial Discretionary Trust

[2018] NSWCA 163

Court of Appeal (NSW)|2018-02-21|Before: Bathurst CJ, Beazley P, Gleeson JA

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At a glance

Source facts

Court

Court of Appeal (NSW)

Decision date

2018-02-21

Before

Bathurst CJ, Beazley P, Gleeson JA

Catchwords

[1971] HCA 71 Cactus Imaging Pty Ltd v Peters (2006) 71 NSWLR 9
[1998] HCA 42 Geraghty v Minter (1979) 142 CLR 177
[1979] HCA 42 Herbert Morris Ltd v Saxelby [1916] 1 AC 688 House v The King (1936) 55 CLR 499
[1993] HCA 56 Lindner v Murdock's Garage (1950) 83 CLR 628

Source

Original judgment source is linked above.

Catchwords

[1971] HCA 71 Cactus Imaging Pty Ltd v Peters (2006) 71 NSWLR 9[1998] HCA 42 Geraghty v Minter (1979) 142 CLR 177[1979] HCA 42 Herbert Morris Ltd v Saxelby [1916] 1 AC 688 House v The King (1936) 55 CLR 499[1993] HCA 56 Lindner v Murdock's Garage (1950) 83 CLR 628[1950] HCA 48 Maggbury Pty Ltd v Hafele Australia Pty Ltd (2001) 210 CLR 181[2002] SASC 312 Nordenfelt v The Maxim Nordenfelt Guns & Ammunition Co Ltd [1894] AC 535 O'Grady v Northern Queensland Co Ltd (1990) 169 CLR 356[1995] HCA 36 Patrick Stevedores Operations No 2 Pty Ltd v Maritime Union of Australia (1998) 195 CLR 1 at 47

Judgment (29 paragraphs)

[1]

Background

The following outline of the background facts is taken from the facts as found by the primary judge, supplemented by some references to the evidence.
Dargan is the trustee of a trading trust that carries on business operating as a mortgage broking service under the name "Home Loan Experts". Dargan is a specialist mortgage broker that seeks to help customers in niche markets and difficult or complex situations obtain loans.

"Confidential Information" and "Proprietary Information" are not defined terms in the Agreement.
Clause 8 contained non-compete, non-solicitation and non-interference covenants. For a period of 18 months after termination of the Agreement, Mr Isaac was prohibited from doing the following, without the consent of Dargan: 8.1 Engage or prepare to engage in any business or activity that is the same or similar to that part or parts of the business carried on by the Originator in the area of internet marketing for the finance industry or niche marketing to a niche already targeted by the Originator. Other finance related employment business or activities are acceptable to the Originator: 8.1.1 If the Sub-originator was to work for a business or start a business which is involved in internet marketing and either is a Credit Provider or carries on business similar to the Originator then this would be considered a breach of this agreement. 8.2 Without limiting the application of clause 7, Use or permit any person employed by, a related body corporate of, or that is in any way contracted with the Sub-originator, to use any Confidential Information of the Originator. 8.3 Solicit, canvass, approach or accept any approach from any person who was at any time in the 24 months prior to the termination of this agreement, a client, professional referrer or business partner of the Originator in that part or parts of the business carried on by the Originator with a view to obtaining the business or custom of that person in a business that is the same or similar to the business conducted by the Originator. 8.4 Interfere, or knowingly permit any person to interfere with the relationship between the Originator and its customers, Referrers, Credit Providers, Employees or suppliers.
Clauses 8.8 and 8.9 of the Agreement provided: 8.8 If sub-originator breaches Clause 8, sub-originator agrees and declares that it will not object to any proceedings to restrain, enjoin or injunct any conduct which would constitute a breach of this clause, notwithstanding that alternative remedies may be available. 8.9 For the avoidance of doubt, Clauses 7 and 8 survive termination of this agreement, however that occurs.
The primary judge summarised the operation of the Agreement in these terms (at [20]): [20] In summary, under the [Agreement] the Defendant was obliged to use its best endeavours to submit credit applications to the Credit Providers for approval (clause 6.6(i)). This involved interviewing the applicants and making relevant enquiries to ensure the Credit Provider had the necessary information to assess the suitability of an application (clause 6.6(vi) and 6.8). The Defendant could choose the Credit Provider, type of loan and method of presenting the loan applications (clause 18.1), however the Plaintiff had the right to deny an application being submitted (clause 5.3). Provided the Plaintiff did not veto the loan application, the Defendant was to lodge the loan application and related document with the Credit Provider "on behalf of the Originator" (clause 6.13), and thereafter manage the processing of each loan through to settlement, and the post-settlement client relationship (clause 6.14-6.15).
Credit Providers paid upfront commission to Connective which was split between Dargan and the relevant sub-originator who submitted the loan, on the terms of the sub-originator's contract with Dargan. Similarly, the monthly trail commission paid by Credit Providers to Connective was also split between Dargan and the relevant sub-originator, again on the terms of the sub-originator's contract with Dargan.
As a sub-originator, Mr Isaac was entitled to a different level of upfront and trail commission depending upon whether the loan was self-generated business, website/marketing-generated business or referrals from Dargan's director (cl 9 and Annexure B). The commission payable to Mr Isaac with respect to a Participating Loan for self-generated business, was an upfront fee of 60 percent of the amount received and trail commission of 40 percent of the amount received; for website/marketing-generated business, an upfront fee of 45 percent and trail commission of 25 percent; and for referrals from the Director of Dargan an upfront fee of 35 percent and nil trail commission.
Trail commission was no longer payable to Mr Isaac after termination of the Agreement (cls 13.1(iv) and 14.1(ii)).
While the Agreement was on-foot, Mr Isaac was entitled to sell his portfolio of loans, being the loans he was entitled to receive commission for, subject to Dargan approving the sale (cl 14.2(ii)).
Mr Isaac asserted in his affidavit that he operated a business which was separate and distinct from Dargan's and he was permitted and did decide which Credit Providers he would submit loans to. However, as the primary judge noted at [186], Mr Isaac did agree that he submitted all loans via Connective, because it was Connective's panel of lenders with whom he had direct accreditation.
It was common ground that Dargan conducted on-line marketing and referred leads generated through that activity to Mr Isaac and other mortgage brokers. Mr Isaac deposed that at the end of his engagement with Dargan on 30 November 2016, his loan book/portfolio was approximately $160 million and that he also managed approximately another $140 million of loans which originated from other brokers who had originated loans through Dargan and had subsequently ceased their engagement with Dargan.
Mr Isaac described the Mercury database as the customer relationship management software that brokers at Dargan generally used as a central repository of client and prospective client information and as a tool to manage client pipelines, broker statistics and client leads. He gave evidence that he downloaded data hundreds of times from Mercury during his engagement with Dargan.
Mr Dargan gave evidence that the records in the Mercury database are password protected, that only sub-originators of Dargan can access its records in Mercury, that each sub-originator of Dargan can access all of its records, and that it is possible to download the client list from Mercury.
On 30 November 2016, the Agreement was terminated by mutual consent during a conversation between Mr Isaac and Mr Dargan.

[3]

Interlocutory orders

On 16 March 2017, interlocutory orders were made by consent by Pembroke J in the following terms: 1. The defendant will provide the plaintiff with a copy of his current list of clients (the defendant's client list) by 4pm on Friday, 17 March 2017. 2. Order that by 4pm on Friday, 17 March 2017 the defendant return to the plaintiff or destroy: (a) any and all copies in the care, custody or control of the defendant of the list of the plaintiff's clients contained within the database maintained by the plaintiff (the plaintiff's client list); (b) any and all copies of any extract or subset of the plaintiff's client list; (c) any and all notes of the contents of the plaintiff's client list; and (d) any database containing the client list or any information from the plaintiff's client list; Save that the defendant is not obliged to return or destroy any part of a database document or file which records only the information contained in the defendant's client list or a subset thereof. 3. The defendant be restrained until further order from: (a) discussing any of the contents of the plaintiff's client list or information taken from the plaintiff's client list to any third party; and/or (b) making any use whatsoever of the contents of the plaintiff's client list or information taken from the client; Save that the defendant is not so restrained in relation to the contents of the defendant's client list or information taken from that list.
The effect of the interlocutory regime was that Mr Isaac was restrained from disclosing or making use of Dargan's client list, but not insofar as it included any information on what was referred to as the defendant's client list, being the list which Mr Isaac's solicitors provided to Dargan's solicitors on about 20 March 2017, pursuant to order 1 made on 16 March 2017. This list, which was also referred to as the Retained List, was annexure A to Mr Isaac's defence; it contained approximately 290 names, but no other information. A copy of this list was exhibited to Mr Dargan's affidavit of 11 April 2017 and tendered in evidence by Dargan without any confidentiality order being sought or made.
Mr Dargan deposed that of the names on the Retained List: 93 persons are recorded by Dargan in the Mercury database as having been originated by a previous sub-originator of Dargan, rather than Mr Isaac, or by a referral by Mr Dargan; 44 persons are recorded as having been sourced from a Dargan marketing source; and 64 persons are recorded as having been sourced by referral from a Dargan lead. Mr Isaac did not dispute this part of Mr Dargan's evidence.

[4]

Dargan's pleaded claim

In its statement of claim, after pleading the terms of the Agreement, Dargan pleaded the following breaches of the Agreement by Mr Isaac: 1. that he had used client information he had received from Dargan in the course of his work for Dargan under the Agreement to refer customers of Dargan to RAMS (the Referral Conduct) (par 18) and this constituted a breach of, among others, the confidentiality term in cl 7.4 (par 19); 2. that he had retained in his possession, after termination of the Agreement, a list or lists of customers of Dargan, referred to as the Retained List (par 20) which included persons who had been customers of Dargan during the period of 24 months prior to 30 November 2016 (par 21) and included persons who were not persons who became clients of Dargan due to being friends and family of Mr Isaac or through introductions from such persons (the Retention Conduct) (par 22), which was a breach, among others, of the ownership term in cl 7.5(v) (par 23); 3. that he provided the Retained List to RAMS (the Provision Conduct) (par 24) and this constituted a breach of, among others, the confidentiality term in cl 7.4, the non-use term in cl 8.2, and the non-interfere term in cl 8.4 (par 25); 4. that he used the information in the Retained List in the course of providing services to RAMS through using it to facilitate contacts with clients of Dargan, other than persons who became clients of Dargan due to being friends and family of Mr Isaac or through introductions from friends or family of Mr Isaac (the Use Conduct) (par 26) and that this conduct constituted a breach of the pleaded terms of the Agreement (par 27); 5. that he had, since 30 November 2016, solicited, canvassed, approached and accepted approaches from persons who were, in the 24 months prior to termination of the Agreement, clients of Dargan (not being persons who became clients of Dargan due to being friends and family of Mr Isaac or through introduction from friends or family of Mr Isaac) with a view to obtaining the business of those persons for RAMS (the Soliciting Conduct) (par 28) and that this conduct constituted a breach of the non-solicitation term in cl 8.3 and the non-interfere term in cl 8.4 (par 29);
In addition, Dargan pleaded that Mr Isaac received information concerning clients of Dargan in the course of providing services to Dargan in circumstances of confidentiality (par 31), that he owed an equitable duty of confidence to Dargan in relation to client information (par 32), and that the Referral, Retention, Provision and Use Conduct constituted a breach of Mr Isaac's equitable duty of confidence (par 33).
In his defence filed on 31 March 2017, Mr Isaac admitted the breaches of the Agreement pleaded in pars 20, 21 and 22 of the statement of claim concerning the Retention Conduct (defence pars 20, 21 and 22). Mr Isaac also admitted the Use Conduct (defence par 26) and the Soliciting Conduct (defence par 28) with respect to the information in the Retained List.
On 13 June 2017, Mr Isaac notified Dargan that he consented to a continuation of the interlocutory regime ordered on 16 March 2017. Mr Isaac reiterated that agreement in his closing submissions, as the primary judge noted at [33].

[5]

Confidential information

After observing that the expression "Confidential Information" is not a defined term in the Agreement, the primary judge found that cl 7.4 contains a non-exhaustive list of information that does fall within its definition as contemplated under the Agreement and is intended to include all of the information generated by the sub-originator pursuant to the activities referred to in cl 6: at [242].
The primary judge further found that even if the expression "Confidential Information" was, as Mr Isaac contended, to have the meaning as understood at law, the client details, including a client list, would be characterised as such, much of it being of great commercial value: at [243]. His Honour found that such information plainly has the necessary quality of confidence and is imparted in circumstances importing an obligation of confidence given its commercial value and degree of detail and intimacy concerning the financial profile of its clients: at [244].
The primary judge rejected Mr Isaac's contention that the necessary quality of confidence was lost by reason of certain clients being identified on Dargan's or Mr Isaac's Facebook page as clients of Dargan. His Honour reasoned (at [245]): I do not accept the information loses its necessary quality of confidence by reason of certain clients being identified on the Plaintiff or Defendant's Facebook page as clients of the Plaintiff. First, the clients that have posted publicly do not account for all the clients the Defendant acted for (including the Lost Borrowers). Further, details beyond the names of the clients cannot necessarily be derived from a mere Facebook post. As explained by Mr Dargan, the privacy settings of the clients may prevent viewers from accessing any further information beyond their Facebook name, and also from making direct contact with them through Facebook. On these grounds, I am satisfied details of the clients, including the client list, have not entered the public domain so as to be stripped of the necessary quality of confidence that would otherwise attach to such information.
His Honour found that, while cl 7.4 restricts the use of Confidential Information during the currency of an Agreement (and for ten years afterwards), to give the Agreement commercial efficacy, that restriction should be read, as Dargan submitted, with the implied exception of use by Mr Isaac for Dargan's business: at [246].

[6]

Breaches of the Agreement

The primary judge noted that given the admissions in Mr Isaac's defence and his evidence, the following matters were not in dispute concerning the alleged breaches of the Agreement (at [248] - [249]):

Mr Isaac admitted that he retained in his possession after termination of the Agreement, a list or lists of customers of Dargan and that the list tendered in evidence included well over 100 names of clients, which Mr Isaac accepted he used while at RAMS. While some of these clients were Mr Isaac's family and friends, some were not;
Mr Isaac accepted that he downloaded the client content list from the on-line computer platform Mercury directly to his computer and he also emailed some accreditations, lender updates, and email content for customers to himself;
Mr Isaac accepted that he provided the RAMS's receptionist with a list of 80-100 of his clients' names and addresses from his time with Dargan for the sending out of Christmas cards.

Having earlier concluded that Dargan's client list clearly fell within the meaning of the term "Confidential Information" as used in the Agreement, his Honour found that Mr Isaac had retained and used information concerning clients, including the client list of Dargan, and had breached cls 7.4, 7.5 and 8.2 of the Agreement relating to the misuse of Confidential Information: at [250]. His Honour further found that the admissions by Mr Isaac "that the lists he did retain and use were lists of clients he had while working for [Dargan] make plain that such lists clearly formed part of [Dargan's] client list": at [251]. There is no challenge to these findings.
In addition, the primary judge found that the retention of the client list by Mr Isaac was also a breach of cl 7.2 by retaining Dargan's copyright material in the client list: at [252]. Ground 10 challenged this finding, but was not pressed on appeal.
The primary judge found that Mr Isaac had breached the restraints in cls 8.3 and 8.4 of the Agreement by, at the very least, accepting approaches from the Lost Borrowers: at [253]. His Honour also found that, with the exception of one of the Lost Borrowers (Andrew Malcolm and Jane Crofts), the only reason the Lost Borrowers approached or accepted an approach from Mr Isaac was because he was the same person they had dealt with in their relationship with Dargan, and his Honour inferred that they were not dissatisfied with the services of Dargan: at [260].
The primary judge found that the exception in s 51(2)(b) of the Competition and Consumer Act 2010 (Cth) (CC Act) operated to take the restraints in cls 8.3 and 8.4 of the Agreement outside the cartel provisions in Div 1 of Pt IV of the CC Act, in particular, s 44ZZRD: at [256]. Grounds 3, 4 and 5 challenged this finding, but were not pressed on appeal.
The primary judge further found that cls 8.3 and 8.4 were not unreasonable, given that these restraints "go no further than necessary for the reasonable protection of the legitimate interests of [Dargan]": at [257].
Having regard to his findings on liability, his Honour concluded at [258] that it was appropriate to grant injunctive relief as sought in pars 1 and 2 of the statement of claim: at [258].

[8]

Restraints of trade - applicable principles

There is no dispute as to the primary judge's statement of the legal principles concerning the reasonableness of a restraint of trade. However, given that Mr Isaac contended that his Honour misapplied those principles it is of assistance to recall some basic principles.
At common law a restraint of trade is contrary to public policy and void unless justified by the special circumstances of the particular case. A restraint may be enforced if the restraint is reasonably necessary for the protection of the parties concerned and reasonable in the interests of the public: Nordenfelt v The Maxim Nordenfelt Guns & Ammunition Co Ltd [1894] AC 535 at 565 (Lord Macnaghten); Lindner v Murdock's Garage (1950) 83 CLR 628; [1950] HCA 48 at 633 (Latham CJ); Buckley v Tutty (1971) 125 CLR 353; [1971] HCA 71 at 376, 379-380.
In New South Wales, it is necessary to have regard to the Restraints of Trade Act 1976 (NSW) which relevantly provides in s 4: 4 Extent to which restraint of trade valid (1) A restraint of trade is valid to the extent to which it is not against public policy, whether it is in severable terms or not. (2) Subsection (1) does not affect the invalidity of a restraint of trade by reason of any matter other than public policy. (3) Where, on application by a person subject to the restraint, it appears to the Supreme Court that a restraint of trade is, as regards its application to the applicant, against public policy to any extent by reason of, or partly by reason of, a manifest failure by a person who created or joined in creating the restraint to attempt to make the restraint a reasonable restraint, the Court, having regard to the circumstances in which the restraint was created, may, on such terms as the Court thinks fit, order that the restraint be, as regards its application to the applicant, altogether invalid or valid to such extent only (not exceeding the extent to which the restraint is not against public policy) as the Court thinks fit and any such order shall, notwithstanding sub-section (1), have effect on and from such date (not being a date earlier than the date on which the order was made) as is specified in the order. …
The correct approach to the application of s 4(1) of the Restraints of Trade Act is well settled. In Orton v Melman [1981] 1 NSWLR 583 at 587 McLelland J (as his Honour then was) explained that first, the Court determines whether the alleged breach (independently of public policy considerations) does or will infringe the terms of the restraint properly construed. Next, the Court determines whether the restraint, so far as it applies to that breach, is contrary to public policy. If it is not, the restraint is valid, subject to any order which may be made under s 4(3). These principles have been approved in later cases including in this Court: Wright v Gasweld Pty Ltd (1991) 22 NSWLR 317 at 328; Woolworths Limited v Olson [2004] NSWCA 372 at [42]-[44]; Jardin and Jardin Investments Pty Ltd v Metcash Ltd and Metcash Trading Ltd [2011] NSWCA 409 at [87].
The effect of s 4(1) of the Restraints of Trade Act is to require, for the purpose of determining the validity of a restraint, that attention be focussed on the actual or apprehended breach, rather than on imaginary or potential breaches: Cactus Imaging Pty Ltd v Peters (2006) 71 NSWLR 9; [2006] NSWSC 717 at [10] (Brereton J).
The validity of a covenant in restraint of trade is to be judged at the date of its creation: Lindner v Murdock's Garage at 653 (Kitto J); Amoco Australia Pty Ltd v Rocca Bros Motor Engineering Co Pty Ltd (1973) 133 CLR 288; [1973] HCA 40 at 318 (Gibbs J); Geraghty v Minter (1979) 142 CLR 177; [1979] HCA 42 at 181 (Barwick CJ). Nonetheless, the Court may take into account future events that could have been foreseen: Lindner v Murdock's Garage at 653. Hence, when exercising its discretion whether or not to grant relief, the Court considers matters as at the date of the hearing: Sidameneo (No 456) Pty Ltd v Alexander [2011] NSWCA 418 at [70] (Young JA, Beazley and Basten JJA agreeing); Tullett Prebon (Australia) Pty Ltd v Purcell [2008] NSWSC 852 at [88]; (2008) 175 IR 414 at 440 (Brereton J).
The nature of the interest meriting protection under a covenant in restraint of trade will differ according to the type of restraint under consideration. In Tullett Prebon (Australia) Pty Ltd v Purcell, a case involving restraints in an employment case, Brereton J said at [47]: Whether a restraint is reasonable having regard to the interests of the parties depends on two, albeit related, considerations: first, whether the covenantee has a legitimate protectable interest, and secondly, whether the restraint is no more than reasonable for the legitimate protection of that interest. A covenantee is not entitled to be protected against mere competition; the legitimate interests which may be the subject of protection by covenant are in the nature of proprietary subject matter [Vandervell Products Ltd v McLeod [1957] RPC 185; Tank Lining Corporation v Dunlop Industries Ltd (1982) 40 OR (2d) 219; 140 DLR (3d) 659 at 664], including trade secrets and confidential information, and goodwill including customer connection.
However as Young JA explained in Sidameneo (No 456) Pty Ltd v Alexander at [31]-[32], the word "proprietary" is used in a special sense and will include legitimate commercial interests. In this regard, his Honour referred to the view he had expressed in Twenty-First Australia Inc v Shade (Supreme Court (NSW), Young J, 31 July 1998, unrep) and Stokely-Van Camp Inc v New Generation Beverages Pty Ltd (1998) 44 NSWLR 607 at 612-613.
"Goodwill" has been described as a rather elusive concept: Sidameneo (No 456) Pty Ltd v Alexander at [54]. Goodwill has been referred to as the product of combining and using the tangible, intangible and human assets of a business for such purposes and in such ways that custom is drawn to it: Federal Commissioner of Taxation v Murry (1998) 193 CLR 605; [1998] HCA 42 at [24]. It has been said that it is more accurate to refer to goodwill as having sources than being composed of elements, given that goodwill is to be seen as adding value to a business "by reason of" situation, name and reputation, and other matters, not because goodwill is composed of such elements: Federal Commissioner of Taxation v Murry at [24], citing Inland Revenue Commissioners v Muller & Co's Margarine Ltd [1901] AC 217 at 235 (Lord Lindley). It has also been recognised that many of the sources of goodwill are not themselves property, nor assets for accounting purposes: Federal Commissioner of Taxation v Murry at [25].
Generally, a stricter and less favourable view is taken of covenants in restraint of trade between employer and employee than in commercial agreements. As Mason P explained in Woolworths Limited v Olson at [38]: The courts in general take a stricter and less favourable view of covenants in restraint of trade entered into between employer and employee than of similar covenants in commercial agreements (Geraghty v Minter (1979) 142 CLR 177 at 185). The reasons are explained in J D Heydon, The Restraint of Trade Doctrine (2nd ed., 1999) at pp 68-69. It is nevertheless well established that an employer may have interests capable of protection by a restraint covenant. These interests go beyond protection of goodwill and retention of customers and extend to trade secrets …
The same point is made by JD Heydon in the most recent edition of The Restraint of Trade Doctrine (4th ed, 2018, LexisNexis Butterworths) at 96-97, where four main reasons are given for the Court's approach in employment cases. First, the inequality of bargaining power between the parties. Second, the employee may be giving up that employee's only asset, which depends on specialised training and which may not be at all negotiable. Third, when labour is hired it remains valuable whether or not the employee later competes. Fourth, once the employee accepts the post-employment restraints, the employer's power during the contract is much increased by reason of the inhibition on the employee's ability to threaten to leave and seek work elsewhere.
That the principles relating to covenants in restraint of trade apply to relationships between contractor and principal is not in doubt. NE Perry Pty Ltd v Judge (2002) 84 SASR 86; [2002] SASC 312 (Perry) involved a restraint on a company, AMJ Chiropractors Pty Ltd that had provided services as a contractor at a clinic run by another company. Doyle CJ said at [20]: The contract is not a contract of employment. AMJ is an independent contractor. However, cl 10 imposes a restraint on AMJ practising as a chiropractor. I see no reason why the common law principles relating to covenants in restraint of trade should not apply to the contract. The impact of the covenant on the interests of the parties and on the public interest does not appear to me to be affected by the fact that the contract is not a contract of employment.
In Perry, Doyle CJ applied as the relevant test the principles articulated by Latham CJ in Lindner v Murdock's Garage at 636. Bleby J at [61] and Besanko J at [97], [100] and [124] also applied the test in Lindner v Murdock's Garage.
BB Australia Pty Ltd v Karioi Pty Ltd [2010] NSWCA 347 concerned restraints in a franchise agreement. Macfarlan J remarked at [61]: Franchise agreements commonly have characteristics relevant to both employment and vendor/purchaser categories… As a result, to determine whether the stricter, less favourable view taken in the employment cases should be applied to the present case, it is necessary to look carefully at the features of the particular franchise relationship in question, without presuming in advance that the approach relevant to one rather than the other of the categories is necessarily applicable.
In Bridge v Deacons [1984] 1 AC 705, doubt was expressed as to whether the legitimate interests can be necessarily ascertained by placing the relevant agreement in a particular category and then trying to align that category with existing cases, such as employment cases or sale of business agreements. Bridge v Deacons involved a restraint clause in a partnership agreement. Lord Fraser, delivering judgment of the Privy Council on behalf of the other Lordships, observed at 714 that: The agreement in the present case, being one between partners, does not conform exactly to either of the types to which reference has just been made, although it had some resemblance to both. Their Lordships are of the opinion that a decision on whether the restrictions in this agreement are enforceable or not cannot be reached by attempting to place the agreement in any particular category, or by seeking for the category to which it is most closely analogous. The proper approach is that adopted by Lord Reid in the Esso Petroleum case [1968] A.C. 269, where he said, at p. 301: I think it better to ascertain what were the legitimate interests of the appellants which they were entitled to protect and then to see whether these restraints were more than adequate for that purpose.
In Winnipeg Livestock Sales Ltd v Plewman [2000] 192 DLR (4th) 525 at [24], the Manitoba Court of Appeal expressed the view that the stricter, less favourable view of a restraint of trade in employment cases, compared to commercial arrangements, should be applied to independent contractor relationships.
In the present case, Mr Isaac did not contend that the independent contractor relationship the subject of the Agreement was analogous to an employment relationship, nor that the stricter, less favourable view of a restraint in the employment cases should be applied to the restraints in the Agreement.

[9]

Onus of proof

One further matter should be mentioned. A question arises as to whether s 4(1) of the Restraints of Trade Act changes the onus of proof of unreasonableness at common law. The parties did not refer to s 4(1) before the primary judge, nor in their written submissions on appeal. Mr Isaac provided supplementary submissions, by leave, after the conclusion of the hearing on this issue. Mr Isaac submitted that s 4(1) of the Restraints of Trade Act 1976 (NSW) did not alter the position at common law. Dargan did not advance any submissions to the contrary.
In Idameneo (No 123) Pty Ltd v Angel-Honnibal [2002] NSWSC 1214 Palmer J expressed the view that s 4(1) did not alter the common law position. His Honour remarked at [45]-[48]: 45 In Herbert Morris Ltd v Saxelby [1916] 1 AC 688, it was held by Lord Atkinson (at 700) and by Lord Parker (at 707-8) that the onus of establishing that the restraint is reasonable as between the parties lies on the person seeking to enforce the restraint, while the onus of establishing that the restraint is contrary to the public interest lies on the person seeking to invalidate the restraint. That proposition has been widely accepted although it has been observed that the reason for apportioning onus in this way is somewhat obscure: see per Lord Hodson in Esso Petroleum Co Ltd v Harper's Garage (Stourport) Ltd [1968] AC 269, at 319E. The proposition seems to have been accepted without the necessity for comment by the High Court in Buckley v Tutty at 337. 46 These cases, however, were concerned with common law principles, unaffected by statute. In New South Wales, whether or not a restraint of trade is valid in any particular case is now determined by reference to the common law principles as modified by the operation of s.4(1) of the Restraints of Trade Act, 1976 (NSW). That subsection is in the following terms: … 48 Other than to enable the Court to "read down" the restraint of trade covenant to the particular breach alleged, s.4(1) adds nothing to the common law rules as to the validity of a restraint of trade clause. In particular, the section says nothing about who is to bear the onus of establishing reasonableness as between the parties and as to whether the restraint is in the public interest. I can see no reason why the apportionment of the onus of proof on these two issues, as laid down in Herbert Morris Ltd v Saxelby, should be regarded as altered in any way by the Restraints of Trade Act. This seems to have been accepted by the majority of the Full Court in Hospitality Group Pty Ltd v Australian Rugby Union Ltd (2001) 110 FCR 157, at 181, where the majority acted on a concession from Counsel to this effect; it seems also to have been accepted by the Court of Appeal in Curro and Anor v Beyond Productions Pty Ltd (1993) 30 NSWLR 337, at 344C. The remarks by Palmer J were referred to by Young JA with apparent approval in Sidameneo (No 456) Pty Ltd v Alexander at [82].
A similar view has been taken in other first instance authorities that under the Restraints of Trade Act the person seeking to enforce the restraint has the onus to prove the circumstances from which reasonableness can, as a matter of law, be inferred: OAMPS Insurance Brokers Ltd v Hanna [2010] NSWSC 781 at [69]-[70] (Hammerschlag J); Veda Advantage (Australia) Pty Ltd v De Beer [2016] NSWSC 37 at [48] (Black J).
The reasoning of Palmer J has much attraction, however, as will appear, it is not necessary to determine this question for the disposition of the present appeal.
It is convenient and appropriate to first address the challenge to the finding of breach of cl 8.4 of the Agreement.

[12]

Decision

The starting point is to identify the context and purpose of the non-interference covenant in cl 8.4. The context is that it is part of the restraints imposed on Mr Isaac post termination of the Agreement in relation to use of confidential information (cl 8.2), soliciting Dargan's clients (cl 8.3) and interference with Dargan's business relationships with, among others, its clients, Referrers, Credit Providers, Employees and suppliers (cl 8.4).
Restraints on interference, such as cl 8.4 are not uncommon: see, for example, DP World Sydney Ltd v Guy [2016] NSWSC 1072. Such a covenant protects customer connections and may also protect confidential information by prohibiting conduct which interferes with the relationship between the covenantee and its customers or others such as its suppliers.
Here, there is a degree of overlap between the non-solicitation covenant in cl 8.3 and the non-interference covenant in cl 8.4. In construing these provisions which are part of a written contract, the court is to have regard to all the words used "so as to render them all harmonious with one another": Australian Broadcasting Commission v Australasian Performing Right Association Limited (1973) 129 CLR 99 at 109; [1973] HCA 36 (Gibbs J).
Clause 8.3 is directed to prohibiting solicitation of any person who, relevantly, was a client of Dargan within the 24 months period prior to the termination of the Agreement; in this case, within the 24 months prior to 30 November 2016. That restraint is directed to both present and past clients of Dargan. Clause 8.4 is directed to prohibiting conduct which interferes with certain designated relationships, including between Dargan and its clients. The use of the definite article in cl 8.4 when referring to "the relationship" serves to emphasise that this restraint is directed to an existing relationship. So much was common ground on appeal.
Mr Isaac submitted that once a loan advance has been settled and the funds have been advanced by the Credit Provider to the client, it can no longer be said that Dargan has an existing relationship with the client. According to the submission, the service provided by Dargan to the client as originator of the loan (through its sub-originators) has been performed. However, that submission ignores the terms of the Agreement which provides that the sub-originator has obligations post settlement of the loan. Those obligations include ongoing reporting to Dargan if the credit worthiness of the client changes adversely (cl 6.7), and managing the post-settlement client relationship (cl 6.15).
In my view, the question of whether particular conduct of Mr Isaac in approaching or accepting approaches from the nine Lost Borrowers interfered with an existing relationship between Dargan and its client, is ultimately a question of fact in each case.
Turning to the evidence concerning the nine Lost Borrowers, the following observations can be made. First, Andrew Malcolm and Jane Crofts obtained a loan through RAMS on 23 December 2016 for an amount of $1,000,000. This involved a refinance of an existing loan which had been originated through Dargan. There is evidence that Ms Crofts was seeking to refinance her loan to obtain a better deal during October 2016 through Mr Harry Cui, another sub-originator of Dargan and that Mr Isaac was in, at least, email communication with Ms Crofts on 23 November 2016, although the emails themselves were not included in the materials provided on appeal.
In cross-examination, Mr Isaac rejected the suggestion that the loan application subsequently settled through RAMS had been submitted by him for Mr Malcolm and Ms Crofts before 1 December 2016. Mr Isaac gave unchallenged evidence that it was possible to obtain a loan in only about three weeks using a function described as Fast Refi and that was the procedure followed in relation to Mr Malcolm and Ms Crofts. Mr Isaac also gave the following evidence: The Jane Crofts matter was dealt - by Mr Dargan and myself, and there's emails to that effect in both her evidence.
That evidence was consistent with Mr Isaac's affidavit evidence that the matter concerning Ms Crofts was resolved between Mr Dargan and Mr Isaac in email correspondence. The terms of that resolution were not included in the materials before this Court. Given the state of the evidence, it is not possible to conclude that there was a breach of cl 8.4 insofar as Mr Isaac acted for Mr Malcolm and Ms Crofts on the refinance of their loan through RAMS in December 2016.
As to the second, third, fourth, fifth, sixth and ninth Lost Borrowers (Matthew and Laurie McDonald, Amer and Adelgisa Khafaji, David and Gillian Kidd, Vuong Thu Van Tran and Kwok-Man Wan, Katie and Matthew Vaughan and Andrew Miroshnikoff), Mr Isaac gave unchallenged evidence in cross-examination that the loan which he originated for each of them through RAMS was in respect of a new purchase, that is, new finance. The primary judge considered (at [255]) that the fact that Mr Isaac acted for persons on a new loan while at RAMS, not involving a refinance of a loan originated through Dargan, would nonetheless constitute interference with an existing relationship between Dargan and those persons. I respectfully disagree. A distinction is to be drawn between an existing client relationship with Dargan in respect of which the sub-originator interferes by arranging a refinance through another originator, and new finance originated for persons who had previously engaged Dargan to originate other finance.
As to the seventh Lost Borrower (Youngah Oh), there is no evidence that the two loans which were originated through RAMS in May 2017, were a refinance of existing loans originated through Dargan. As to the eighth Lost Borrower (Leon and Shelly Plummer), the Court was not taken to any evidence of the circumstances of their loan which was originated through RAMS on 29 May 2017 for $396,000. It is not possible to conclude in respect of either of these Lost Borrowers that their loans through RAMS involved a refinance of an existing loan originated by Dargan.
It should be noted for completeness that Dargan did not seek to argue either at trial or on appeal by way of notice of contention, that Mr Isaac's conduct in relation to the nine Lost Borrowers breached cl 8.4 by interfering with Dargan's existing relationship with Credit Providers because Dargan was subject to clawback of commission under the terms of the Connective Agreement (for example, in the event of early payment of the loan, such as, upon refinance by another lender: see cl 12 of the Connective Agreement).
In my view, the evidence, as it appears, does not establish that Mr Isaac breached the non-interference covenant in cl 8.4 by either approaching or accepting an approach from any of the Lost Borrowers. Ground 6 has been made out and the finding by the primary judge that Mr Isaac breached cl 8.4 should be set aside.
One further matter should be mentioned. Setting aside the finding of breach of cl 8.4 will not of itself affect the award of damages, which was based on the same conduct of Mr Isaac as constituting a breach of both cls 8.3 and 8.4. Given that Mr Isaac does not challenge the finding of breach of cl 8.3, the damages award will stand unless Mr Isaac succeeds in his contention that the non-solicitation covenant in cl 8.3 is void as a restraint of trade.

[13]

Grounds 1 and 2: whether the restraints of trade in cls 8.3 and 8.4 were unreasonable?

In finding that cls 8.3 and 8.4 of the Agreement were not unreasonable, the primary judge reasoned that these covenants go no further than necessary for the reasonable protection of the legitimate interests of Dargan. His Honour continued at [257]: As recognised by Latham CJ in Lindner at 633-634, it is well established provisions that preserve confidential information and/or seek that a person who has had personal contact not solicit those customers are reasonable restraints and not void. In light of the Defendant's substantial involvement with the client, both before, during and after a loan has been approved, I am satisfied clause 8.3 and 8.4 reasonably protect the goodwill of the business of the Plaintiff.
After considering the nature of the relationship and responsibilities between the parties under the Agreement (at [233]), the primary judge rejected Mr Isaac's construction of the term "clients" in the Agreement, in particular in cl 8.3, as somehow carving out clients for whom Mr Isaac, as sub-originator, had worked, giving the following reasons at [241]: Notwithstanding the Sub-originator's status as an independent contractor, its obligations in essentially managing the entire client relationship, and the work it may do in introducing new clients to the Plaintiff, the Originator always maintains a commercial interest in the clients (as reflected in the commission payable), and always maintains an overriding level of control over the client relationship (as seen in its power to veto loan applications and sale of portfolio). Thus, the Sub-originator's clients under the [Agreement] will always be, properly construed, shared clients of the Sub-originator, Originator and Lender. Further, and critical to clause 8.3, once the [Agreement] is terminated, the Sub-originator no longer has any clients, making it appropriate to refer to those former clients as clients of the Originator and, implicitly, the Lender, but critically, not the Sub-originator.
The conclusion that the clients were shared clients followed upon his Honour's earlier findings concerning the operation of the Agreement, relevantly, that:

the process anticipated by the Agreement by which the sub-originator introduces business to the originator in the form of loans which comply with the terms of the credit criteria of a Credit Provider for whom the originator acts (cl 5.1), noting that business may be introduced either through the sub-originator's own efforts, direct referrals from Dargan or Dargan's marketing efforts (as evident in the forms of commission available) to the sub-originator: at [234];
the sub-originator must provide all relevant information to the Credit Provider (cl 5.2), and has the right to choose the Credit Provider and loan product (cl 18), however, the originator is under no obligation to agree an application for a participating loan is to be submitted to a Credit Provider and has the right to deny the sub-originator making a loan credit application on behalf of the applicant (cl 5.3): at [235];
while the sub-originator may operate under its own trading name (cl 18.2), advertise at its own expense (cl 18.3) and may develop a personal relationship with many clients, the clients' information is created, acquired, maintained and monitored for the joint commercial interest of each of the originator, sub-originator and lender and the sub-originator has an obligation to make all such information available to the originator and lender, ongoing surveillance and reporting is expected of the sub-originator, especially if the credit worthiness of the client changes adversely: at [236];
the confidentiality and non-compete covenants are not an assignment of Mr Isaac's goodwill, but rather an acknowledgement that he is not going to conduct his own private practice, engaging clients exclusively of his own, but there will always be a sharing in commission between the sub-originator and the originator: at [237];
a sub-originator can sell their portfolio, or implicitly part of their portfolio, while the Agreement is on foot (cl 14.2); the purchaser may be a third party, or it may be the originator (cl 14.2(ii)-(iii)); and in all cases the purchaser must be approved by the originator (cl 14.2(ii)): at [238];
in the event that the Agreement is terminated, the sub-originator will no longer receive trail commission (cl 13.1(iv)) (at [239]);
upon termination of the Agreement, the client ceases to be the shared client of the sub-originator and the originator, and for that matter, the lender, and becomes the client of the originator and the lender (at least while the loan facility is in place): at [239];
as a consequence of termination, the sub-originator no longer has any commercial interest in those clients it wrote loans for and the client does not continue to be a client of the sub-originator following termination of the Agreement: at [240].

Given the conclusion above that cl 8.4 was not breached, it is only necessary to consider ground 1 challenging the finding that the restraint in cl 8.3 was not unreasonable.

[14]

Submissions

Mr Isaac submitted that the primary judge's analysis of the reasonableness of the non-solicitation restraint was affected by two errors as to the operation of the Agreement. First, contrary to his Honour's approach, the Agreement was not an exclusive services agreement and Mr Isaac could originate loans through other lenders. Second, contrary to his Honour's finding, the Agreement did not impose an obligation of ongoing surveillance and reporting on Mr Isaac to Dargan.
Mr Isaac further submitted that in concluding that the restraints were not unreasonable, the primary judge incorrectly reasoned from a principle confined to the goodwill generated by employees for their employers to a principle applying to all persons, such as independent contractors.
In oral argument, senior counsel for Mr Isaac advanced five reasons why the restraint in cl 8.3 was unreasonable. First, the restraint prohibits Mr Isaac from dealing with clients with whom he had dealings during the term of the Agreement. Second, the restraint prohibits Mr Isaac from dealing with clients who were introduced by him and to whom, according to the submission, Dargan cannot claim a proprietary interest. Third, the restraint prohibits Mr Isaac from dealing with clients with whom he had a relationship external to the business of Dargan. Fourth, the primary judge did not identify what goodwill Dargan was seeking to legitimately protect by the restraints. Fifth, the primary judge did not address the reasonableness of the duration of the 18-month non-solicitation.
Dargan sought to uphold the primary judge's decision. It submitted that the common law principles relating to covenants in restraint of trade apply equally to a contract with an independent contractor as they do to an employee. Reference was made to Perry. Dargan also submitted that it had goodwill in relation to each of its customers whether the person servicing those customers was properly classed as an employee or an independent contractor and that it had a legitimate interest to protect its goodwill, customer connections and confidential information.
As to the duration of the non-solicitation restraint in cl 8.3, Dargan pointed to the evidence given by Mr Dargan addressing that very issue.

[16]

Did Dargan have a protectable interest?

The complaint by Mr Isaac that the primary judge incorrectly reasoned from the employment cases dealing with the protectable interest in goodwill generated by the employee, misstates his Honour's reasons. Contrary to Mr Isaac's submissions, his Honour considered the question of whether Dargan had a protectable interest in its customer connections and confidential information by reference to the nature of the relationship and the responsibilities between the parties under the Agreement. As the cases referred to at [64]-[65] above make clear, the nature of the interest meriting protection by a covenant in restraint of trade is not limited to the goodwill of the covenantee's business.
In this Court Mr Isaac repeated his argument below that the restraint in cl 8.3 did not protect goodwill the property of Dargan, but instead restrained deployment of Mr Isaac's own goodwill and accordingly was unreasonable. The primary judge dealt with this issue when he rejected Mr Isaac's characterisation of the Agreement as a franchise-type arrangement: cf [52] and [56]. His Honour also rejected Mr Isaac's contention that the clients for whom he originated loans were his clients. As indicated, his Honour found that the clients were shared clients, at least up until termination of the Agreement, for the reasons given at [241] (set out at [101] above). Neither party challenged that finding.
Accepting the finding that the clients were "shared clients", the critical question is whether the primary judge failed to distinguish between the legitimate interests of Dargan and the business of Mr Isaac as the independent contractor.
That there is a need for care in referring to goodwill (or customer connections) in this context can be seen in FBHS (Aust) Pty Ltd v Stone Homes Pty Ltd [2014] NSWCA 312 where (Leeming JA, Barrett and Gleeson JJA agreeing) referred to the judgment of Jonathan Sumption QC, sitting as a deputy judge, in Marshall v NM Financial Management Ltd [1995] 4 All ER 785. There in relation to a covenant imposed on a self-employed sales agent for a company selling insurance and pension contracts, it was said at 792 that "Mr Marshall's business as an agent, including the goodwill arising from his reputation and connections, was his own property and not the defendant's. The only interest which the defendant itself could have to protect is its interest in the goodwill attaching to its own business as a seller of investment agreements".
Other cases in which the distinction between the principal's business and that of the independent contractor was important include: Pyle v Sharpe Bros Pty Ltd [1968] 2 NSWR 511; Mobil Oil Australia Ltd v McKenzie [1972] VR 315; and WR Carpenter Aust Ltd v Kleisterlee (1988) ATPR 40-913.
Pyle v Sharpe Bros Pty Ltd involved a covenant imposed on a distributor of cordial and soft drinks to individual consumers, many of whom had been discovered by canvassers employed not by the distributor, but by the manufacturer, Sharpe Bros. In holding that the restraint restricting future competition was valid the Full Court (by majority) relied upon a number of circumstances, importantly, that Sharpe Bros and not Pyle found the customers for his products, and gave lists of them to Pyle at the time of entering the agreement, and Sharpe Bros continued to employ canvassers themselves to find other customers and lists of such customers were given to Pyle (at 521-522). Pyle was also under obligations imposed by the agreement to make the results of his business activities in the products of the company known to it and the trade connection in the area was not the distributor's, but that of Sharpe Bros (at 522-523).
Mobil Oil Australia Ltd v McKenzie involved a covenant imposed on sales representatives marketing and distributing Mobil's products (which the distributor had purchased from Mobil) in a designated area. In finding the restraint unreasonable Adam J distinguished the facts in Pyle v Sharpe Bros Pty Ltd and found that only the distributor had found the customers and they had built up the trade connection, albeit in Mobil's products, and that the business carried on by the distributor was his business.
WR Carpenter Aust Ltd v Kleisterlee involved a covenant imposed on a distributor of a variety of merchandise including packaging materials and stationery, prohibiting the distributor within two years after termination of the agreement being directly or indirectly concerned in or interested in the business of selling products of a similar nature or kind to those supplied by Dalton within the Territory. In finding the restraint unreasonable, Southwell J distinguished Pyle v Sharpe Bros Pty Ltd on the grounds that the list of customers provided by Dalton to the distributor was not of much value at all, that Dalton did not operate its business solely through distributors, that the covenant applied to a very large area and, that the business was very much the business of the distributor.
In the present case, the recitals in the Agreement (cl 1.2) make plain that Dargan appointed sub-originators to receive credit applications from applicants in respect of a mortgage origination program with Dargan and Credit Providers for mortgage finance and other finance. While Mr Isaac was conducting his own business as a sub-originator, the relevant contractual relationship with the clients was between Dargan as the originator and the clients. For that purpose, Mr Isaac, as sub-originator, was given access to Dargan's client lists and client details contained in the Mercury database. Dargan had an interest in preserving that client information from use or disclosure other than in connection with its business.
Mr Isaac was given leads by Dargan and also obtained some of his own customers from friends and family and referrals. In that respect there are some similarities with Pyle v Sharpe Bros Pty Ltd, and some differences in that Mr Isaac did not rely entirely on leads from Dargan. Unlike WR Carpenter Aust Ltd v Kleisterlee, the leads given by Dargan (insofar as converted into customers) were valuable. Unlike Mobil Oil Australia Ltd v McKenzie, Mr Isaac was given other clients to manage when other brokers ceased their engagement with Dargan. That business was of significant value.
It is not to the point that the Agreement did not require exclusivity of service on the part of Mr Isaac. His Honour proceeded, correctly, on the basis of considering whether Dargan had a protectable interest in its customer connections and preserving confidential information relating to persons who in fact borrowed money using the service provided by Dargan and its sub-originators.
As the primary judge found, Mr Isaac was obliged to introduce to Dargan, loans that complied with the credit criteria of the Credit Providers (cl 5.1), and to advise Dargan of the results of his activities, including the preferred Credit Provider with whom the application had been lodged (cl 6.6(iv)), and Dargan could reject the application (cl 5.3). Mr Isaac also had ongoing reporting obligations as a sub-originator, especially if the credit worthiness of the client changed adversely (cl 6.7).
That the restraint applies to persons introduced by Mr Isaac to Dargan does not mean that Dargan does not have a legitimate protectable interest in non-solicitation of those clients. Dargan has a commercial interest in protecting its business from the financial impact of clawback of commission by Credit Providers, in the event the client refinances the loan with another lender. Dargan also has a commercial interest in preserving confidential information in relation to its clients, including client details such as the clients' financial profile and requirements.
In my view, there was no error in his Honour's finding that Dargan had a legitimate commercial interest in protecting its customer connections and confidential information in relation to its clients, notwithstanding the substantial involvement of Mr Isaac as sub-originator with the clients with whom he dealt.

[17]

Was the restraint reasonable?

The evidence of Mr Dargan was that Dargan had expended money and effort in promoting itself to niche markets that it targeted. In order to obtain and retain business it was necessary for Dargan to cultivate and accumulate knowledge, as his Honour found, of the client's (financial) profile and requirements, so as to be able to offer the client future loans with Credit Providers on suitable and attractive terms. Under the Agreement the task of servicing the client was placed by Dargan in the hands of the sub-originator, such as Mr Isaac. To develop this customer connection may take some time. There is always a risk that the client may decide to go elsewhere in relation to future loans.
That the non-solicitation restraint applied to clients with whom Mr Isaac had dealings during the term of the Agreement, does not make the restraint unreasonable. Given the substantial involvement of Mr Isaac with the client before, during and after the loan had been approved, including obtaining the information as to the client's profile and managing the post-settlement client relationship, a comparatively mild solicitation may deprive Dargan of valuable business with respect to new loans that might otherwise be expected from its clients for a period: cf Stenhouse Australia Ltd v Phillips [1974] AC 391 at 400-401, where Lord Wilberforce contrasted the comparative fragility of the relationship between an insurance broker and its client and that of a solicitor and his or her client.
That Mr Isaac gave evidence that he did not accept any further marketing leads after May 2015 is not to the point. As indicated, the reasonableness of the restraint must be interpreted in accordance with what was in the reasonable contemplation of the parties at the date when the contract was made and not as matters later turned out. Here, the commission arrangements in the Agreement contemplated referrals from website/marketing-generated business and referrals from Mr Dargan himself.
That Mr Isaac did not personally deal with all of the clients of Dargan does not make the restraint unreasonable. At the time the contract was made, it could be reasonably contemplated that Mr Isaac would have access to Dargan's client lists and client details on the Mercury database. As I have said, Dargan had a legitimate interest in preserving confidential client information from use or disclosure, other than in connection with its business.

[22]

Decision

The terms of cls 7.4 and 7.5(v) of the Agreement are set out at [19] above. Absent a provision to the contrary, a contractual confidentiality provision will generally be construed as limited only to information which is confidential in character. In Maggbury Pty Ltd v Hafele Australia Pty Ltd (2001) 210 CLR 181; [2001] HCA 70 (Maggbury) at [45], Gleeson CJ, Gummow and Hayne JJ said in relation to a case where the expression "Information" was defined in the contract: Ordinarily, the obligations relating to the use and disclosure of the Information would be construed as limited to subject-matter which retained the quality of confidentiality at the time of breach or threatened breach of those obligations. An expression of a contrary intent should, as Judge Learned Hand put it in Picard v United Aircraft Corporation (1942) 128 F 2d 632, be explicit. This is because (Picard (1942) 128 F 2d 632 at 637): the applicant is proposing to broadcast the invention to the world at large, reserving as his protection only the claims which he may secure; and there is ordinarily no reason to suppose that he means to exact any greater protection against the promisor than he will have against others. At any rate, if he does, he should say so. The same judge later expressed the point slightly differently in Conmar Products Corporation v Universal Slide Fastener Co (1949) 172 F 2d 150. Speaking of the relationship between employer and employee, his Honour said (Conmar Products (1949) 172 F 2d 150 at 156): Conceivably an employer might exact from his employees a contract not to disclose the information even after the patent issued. Of what possible value such a contract could be, we find it hard to conceive; but, if an employer did exact it, others would perhaps be obliged to turn to the specifications, if they would use the information. Be that as it may, we should not so construe any secrecy contract unless the intent were put in the most inescapable terms; and the plaintiff's contract had none such. It should be observed that Maggbury was not drawn to the primary judge's attention by the parties, nor referred to by the parties on appeal.
Here, Mr Isaac agreed to "keep" confidential information described non-exhaustively as "Confidential Information" through the classes of information in sub-pars (i)-(vi) of cl 7.4. The contractual obligation in cl 7.4 and the acknowledgement in cl 7.5(v) are not in terms confined to information relating to Dargan or its clients which, by its nature, is confidential.
It might be said that the use of the verb "keep" in cl 7.4 imports the notion of maintaining as confidential something which was itself confidential in the first place: Brand v Monks [2009] NSWSC 1454 at [176] (Ward J). However, I do not consider that much indication of the parties' intention can be gathered from the verb used in the Agreement. Nor do I consider, as Mr Isaac submitted, that the use of the capitalised words "Confidential Information" without defining them, indicates an intention to use those words in the sense of information which, of its nature, is confidential.
It seems to me, following the reasoning in Maggbury, that in the absence of an explicit intent that the confidentiality obligations should be construed as extending the obligation of confidentiality to information not in its nature confidential, that the expression "Confidential Information" is confined in the manner suggested by Mr Isaac. The obligation in cl 7.4 relating to use and disclosure of "Confidential Information" is to be construed as limited to subject matter which retained the quality of confidentiality at the time of breach or threatened breach of those obligations: Maggbury at [45].
As to the second matter raised by Mr Isaac, it may be accepted that cls 7.4 and 7.5(v) respectively limit or confine the confidentiality obligation to information "regarding the Originator's business" and "in relation to the Originator's business".
The words "regarding" and "in relation to" are expressions of wide and general import. Those words require a connection or association between the "Confidential Information" and the originator's business. What connection or association will be sufficient is a question of degree: O'Grady v Northern Queensland Co Ltd (1990) 169 CLR 356; [1990] HCA 16 at 364 (Brennan J) and 376 (McHugh J); PMT Partners Pty Ltd (in liq) v Australian National Parks & Wildlife Service (1995) 184 CLR 301 at 313 (Brennan CJ, Gaudron and McHugh JJ) and 331 (Toohey and Gummow JJ); [1995] HCA 36.
Mr Isaac was required by the terms of the Agreement as a sub-originator to obtain information from the client of the nature identified in cl 6 for the purpose of submitting a loan application to Connective. That information was obtained by Mr Isaac to prepare and "submit accurate and complete Credit Applications to Credit Providers for approval" (cl 6.6(i)). Although not an exclusive services agreement, Mr Isaac submitted all applications from the clients with whom he dealt to Connective. In respect of all such clients, the relevant contractual relationship was between Dargan, as originator of the loan, and the client.
Contrary to Mr Isaac's submission, the primary judge did not fail to distinguish between the wider category of information which Mr Isaac might obtain from clients as sub-originator and information of the nature required to perform his duties under cl 6 of the Agreement. Given the purpose for which the information was obtained, the information which Mr Isaac obtained from the client in performance of his duties under cl 6 of the Agreement, would answer the description of information regarding or in relation to Dargan's business.
Mr Isaac's argument that there is a commercial absurdity in the primary judge's construction of cl 7.4 because it would prevent a sub-originator from using any details of clients and any details regarding Creditor Providers during the currency of the Agreement is answered by the primary judge's reasons at [246]. The restriction in cl 7.4 should be read with the implied exception of use by Mr Isaac for Dargan's business.
Mr Isaac's argument that the primary judge's construction of cl 7.4 leads to a commercial absurdity because it prevents Mr Isaac using for a period of ten years after termination of the Agreement details of Credit Providers (including all of Australia's major banks) used by Dargan, should also be rejected. Clause 7.4(iv) is directed to details of Dargan's use of particular Credit Providers, not who may be Credit Providers who provide mortgage finance. Nothing in cl 7.4(iv) prevents Mr Isaac from using commonplace information such as a bank's telephone number or address, which is readily available public information.
Mr Isaac's argument that the primary judge erred in finding that "Details of clients" in cl 7.4(vi) include not only the identity and contact details of the client, but more intimate information concerning their assets and liabilities and their ability to service loans, is answered by the acknowledgement in cl 7.5(v) that Confidential Information used by the sub-originator in relation to the originator's business is the property of the originator, and cl 6.4, which provides that the sub-originator must promptly provide the originator with any information regarding a Participating Loan requested by the originator or Credit Provider from time to time. That type of information would include "Details of clients … and past or current negotiations with clients" (cl 7.4(vi)).
Ground 8 should be upheld in part.

[24]

Decision

In deciding whether information is of its nature confidential, it is relevant to consider the extent to which the information is known outside the business: Del Casale v Artedomus (Aust) Pty Ltd [2007] NSWCA 172 at [40]. Here, Mr Isaac submitted that the primary judge erred by failing to take into account a number of matters which suggested that the client details were known outside the business of Dargan.
The first matter to which Mr Isaac referred was that Dargan's client information is stored on the Mercury database and that database was accessible to Dargan's employees and brokers. However, it does not follow that access to the information recorded on Mercury by employees and brokers of Dargan undermined the necessary quality of confidence in the client information contained on that database. The Mercury database was not available to the public at large or competitors of Dargan. As Mr Dargan explained in his affidavit of 6 June 2017, the only people who have unlimited access to Mercury are senior management, IT staff and some support staff and no one else can change usernames and passwords. Further, Mercury is password protected and only Dargan's sub-originators can access Dargan's records in Mercury. It was made accessible to Dargan's employees and brokers only for use in its business.
The second matter to which Mr Isaac referred was that information identifying the persons with whom he dealt and their contact details, was also contained in his mobile telephone. That Mr Isaac kept some client details in other mediums, such as his mobile phone, in addition to on his personal computer, is not inconsistent with such information being imparted and received by Mr Isaac in circumstances which gave rise to an obligation of confidence. Accepting that brokers engaged by Dargan who had access to Mercury are subject to an obligation of confidence in respect of use and disclosure of such information, such obligation would also attach to the client contact details if entered in Mr Isaac's mobile phone.
The third matter to which Mr Isaac referred was that the names and methods of contact for each of Mr Isaac's clients were published on his Facebook page. An aide memoire provided to this Court by counsel for Mr Isaac, identified 59 of Mr Isaac's Facebook friends as also appearing on the client list which Mr Isaac retained on his personal computer (the Retained List).
The primary judge addressed this argument and rejected it at [245]. Contrary to Mr Isaac's submissions, the primary judge did not direct his attention to the wrong question. The primary judge found that the clients appearing on Mr Isaac's Facebook page do not account for all the clients for whom he acted. There is no error in this finding, given that there are approximately 290 names on the Retained List. Nor has Mr Isaac demonstrated any error in his Honour's finding that details beyond the names of the clients cannot necessarily be derived from a mere Facebook post.
Mr Isaac submitted that "it is beside the point" that the Facebook settings may have limited members of the public accessing further information. Whether the limited disclosure of the names of some clients on Mr Isaac's Facebook page has the consequence that such information has entered the public domain is a question of fact and a matter of degree. For the reasons given by the primary judge at [245], the contention that clients' details entered the public domain via Mr Isaac's Facebook page, should be rejected.
Ground 9 has not been made out.

[26]

Submissions

Mr Isaac's written submissions proceeded on the basis that order 1 concerned the list of about 300 customers downloaded to his personal computer, referred to as the Retained List.
Mr Isaac did not seek to argue for a construction of the Agreement which gave the confidentiality obligations in cls 7.4 and 8.2 a limited temporal operation after public disclosure: cf Maggbury at [50]. Nor did Mr Isaac seek to argue that the confidentiality obligations were unreasonable restraints of trade: cf Maggbury at [55] ff.
Mr Isaac relies upon the asserted failure by the primary judge to take into account that the information contained in the February 2017 commission statement issued by Connective entered the public domain when it was tendered in open court by Dargan without any confidentiality order being sought or made. In addition, Mr Isaac relies upon the tender by Dargan in open court of the Retained List. According to the submission, there was no utility in enforcing the contractual obligation of confidence where the information has entered the public domain.
Mr Isaac further submitted that independently of the Retained List (that was shown to be in his possession and used by him), he had details of each of his clients recorded in his mobile phone and there could be no utility in restraining him from using one list of names when more extensive information about the persons named are available to him in a separate list the use of which is not to be restrained.
Dargan submitted that no error of the House v The King type had been identified by Mr Isaac (House v The King (1936) 55 CLR 499; [1936] HCA 40). Even if the plaintiff's confidential information had been widely disseminated by the manner in which Dargan had conducted the trial, Dargan submitted that the injunction against Mr Isaac nonetheless had utility as it would prevent him from exploiting his relationship with Dargan's customers in breach of contract to the loss of Dargan.
Dargan also submitted that there was no reason to think that the evidence or the conduct of the trial had caused any public dissemination of Dargan's client information, and the tendering by Dargan of evidence of its client list would not have had, or should not have had, any bearing on the discretion of the primary judge to grant an injunction.

[27]

Decision

It may be accepted that the primary judge did not expressly deal with Mr Isaac's submission that the details of Dargan's client list was now in the public domain.
In considering the significance of the disclosure of information and whether it has entered the public domain, it is necessary to distinguish between cases where there is an equitable obligation of confidence (the retention of the quality of confidence being necessary to sustain relief in equity) and cases where the obligation of confidence is imposed by way of contract (and may involve use or disclosure of information which is not, in its nature, confidential).
As to the position in equity, once information becomes public knowledge or is in "the public domain" equity will refuse to intervene to protect the information because the information has lost its confidentiality: Johns v Australian Securities Commission (1993) 178 CLR 408 at 475 (McHugh J), 432 (Brennan J), 438 (Dawson J) and 460-461 (Gaudron J); [1993] HCA 56. The question whether information is in the public domain is largely one of fact: Johns v ASC at 461 (Gaudron J). Whether information has entered the public domain, requires consideration of the accessibility to the information should members of the public wish to do so: GE Dal Pont, Law of Confidentiality (1st ed, 2015, LexisNexis Butterworths) at 195.
Johns v ASC involved the confidentiality (either in equity or under the Australian Securities Commission Act 1989 (Cth)) of transcripts of private examinations conducted by the ASC in the exercise of its statutory powers which had been disclosed to a State Royal Commission with authorisation to use them in public hearings. Copies of the transcripts were tendered in evidence in public hearings, and the Royal Commission made copies available to journalists and information in the transcripts was published to the media. Brennan J, with whom Dawson J generally agreed, said at 432-433: A defendant who, having received information in circumstances which impose a duty of confidence, makes a limited publication in breach of that duty, can be restrained from further breaching the duty by making a wider publication. But that is not the present case. … When the proceedings of a court, tribunal or commission created by statute or in exercise of the prerogative are open to the public and a fair report of the proceedings can lawfully be published generally, it is not possible to regard information published in those proceedings as outside the public domain (Home Office v Harman, [1983] AC 280, at pp 303, 312). Information published in those circumstances enters the public domain by a lawful gate. Once in the public domain, it can be freely used or disseminated. Information obtained by the media in this way is not "imparted so as to import an obligation of confidence": The Commonwealth v John Fairfax & Sons Ltd (1980) 147 CLR, at p 51, per Mason J. In such a case, the public domain is not measured by the extent of media reporting. If media reporting were the measure of the public domain in relation to information published in such proceedings, the defamation laws would have to be reformulated. It is unnecessary to consider the question whether a defendant to whom information was imparted in circumstances which imposed an obligation of confidence can, by a wide publication of the information in breach of that obligation, avail himself of a defence that the information is thereafter in the public domain (Attorney-General (UK) v Heinemann Publishers Australia Pty Ltd (1987), 8 NSWLR, at p 374; Attorney-General v Guardian Newspapers Ltd [No 2], [1990] 1 AC, at pp 271, 286-288, 293). This case concerns information which was already in the public domain at the time when HWT and the ABC acquired it. In Marcel v Commissioner of Police of the Metropolis, Browne-Wilkinson V-C said ([1992] Ch, at p 237; see also Attorney-General v Guardian Newspapers Ltd [No 2], [1990] 1 AC, at pp 215, 268, 282): "there can be no breach of the duty of confidence once the information or documents are in the public domain and the confidentiality has therefore disappeared. In the case of the ... documents which have been read in open court, they have now lost their confidentiality by disclosure in open court."
Dawson J added at 438: …. the material was introduced into the public domain when it was tendered at a public hearing. There is no breach of confidential information if the information does not have the "quality of confidence". Information which is on the public record cannot have that quality. (Footnotes omitted)
In the present case, the information containing details of Dargan's client list was tendered in evidence in open court by the party now asserting an entitlement to injunctive relief to restrain use or disclosure of the information. Insofar as the relationship between Dargan and Mr Isaac is equitable, the conduct of Dargan may be taken to have implicitly released Mr Isaac from his obligation of confidentiality: Maggbury at [48] (Gleeson CJ, Gummow and Hayne JJ), citing the remarks of Lord Goff in Attorney-General v Guardian Newspapers Ltd [No 2] [1990] 1 AC 109 at 285: … that a case where the confider himself publishes the information might be distinguished from other cases on the basis that the confider, by publishing the information, may have implicitly released the confidant from his obligation.
As to the contractual obligation imposed by the Agreement, Dargan did not contend that only a limited publication of the information has occurred, or that the relative secrecy of the information remains, or that the information is not accessible to the public.
With regard to the last matter, reference should be made to Practice Note SC Gen 2 which deals with access to court files. SC Gen 2 provides that access to material in any proceedings is restricted to parties, except with leave of the Court (par 6) and that access will normally be granted to non-parties in respect of, among others, material that was admitted into evidence, unless the Judge or Registrar dealing with the application considers that the material or portions of it should be kept confidential (par 7).
There was no evidence on appeal as to whether any person has sought access to the February 2017 commission statement or the Retained List that were tendered in evidence by Dargan. Nor was it suggested that Dargan has not taken any steps since the trial to seek a confidentiality order in relation to that material.
I would conclude that the information tendered by Dargan in open court entered the public domain. It is accessible to members of the public who wish to inspect such material, unless the court dealing with the application considers that the material or portions of it should be kept confidential. The basis upon which a claim for confidentiality might be made by Dargan has been foregone by Dargan's tender of the material in open court.
Accepting that error has been established in the exercise of the discretion with respect to order 1, it is necessary for this Court to reconsider this aspect of the relief sought by Dargan.
For my part, I do not consider that an injunction in terms of order 1 should be granted. First, accepting that the contractual obligation of confidence is limited to subject matter which retained the quality of confidentiality at the time of breach or threatened breach, an essential element of the claim to restrain breach of the contractual obligation has not been made out. The information in the February 2017 commission statement and the Retained List has entered the public domain.
Second, even if (contrary to my conclusion in relation to ground 8), the contractual obligation of confidentiality extended to information not of its nature confidential, it is difficult to identify (and Dargan did not identify in its submissions) what damage would be suffered by the use or disclosure of something already in the public domain as a consequence of disclosure by Dargan.
Third and in any event, the undefined expression "Client List" in order 1 lacks certainty and is unacceptably vague. As indicated, Mr Isaac's submissions assumed that the Client List referred to in order 1 was the Retained List. I would not read that expression in such a narrow manner. To do so would be inconsistent with the definition of that expression in par 1 of the summons, referred to at [7] above.
Further and importantly, as the primary judge noted at [251], Dargan did not ever identify a particular list or content in that list. That lack of certainty is an important consideration that would warrant in the circumstances of this case a refusal of the injunction: Redland Bricks Ltd v Morris [1970] AC 652 at 666 (Lord Upjohn). This is not a case like Patrick Stevedores Operations No 2 Pty Ltd v Maritime Union of Australia (1998) 195 CLR 1 at 47; [1998] HCA 30 where the court should grant injunctive relief, even though it may require further intervention of the court to refine the relief as the situation develops.
Ground 7 has been made out.

Parties

Applicant/Plaintiff:

Isaac

Respondent/Defendant:

Dargan Financial Pty Ltd ATF The Dargan Financial Discretionary Trust

Legislation Cited (3)

Australian Securities Commission Act 1989(Cth)

Competition and Consumer Act 2010(Cth)

Restraints of Trade Act 1976(NSW)

Cases Cited (47)

HCA 42 Geraghty v Minter (1979) 142 CLR 177; [1979] HCA 42 Herbert Morris Ltd v Saxelby [1916] 1 AC 688 House v The King (1936) 55 CLR 499; [1936] HCA 40 Idameneo (123) Pty Ltd v Angel-Honnibal [2002] NSWSC 1214 Inland Revenue Commissioners v Muller & Co's Margarine Ltd [1901] AC 217 Jardin and Jardin Investments Pty Ltd v Metcash Ltd and Metcash Trading Ltd [2011] NSWCA 409 Johns v Australian Securities Commission (1993) 178 CLR 408; [1993] HCA 56 Lindner v Murdock's Garage (1950) 83 CLR 628; [1950] HCA 48 Maggbury Pty Ltd v Hafele Australia Pty Ltd (2001) 210 CLR 181; [2001] HCA 70 Marshall v NM Financial Management Ltd [1995] 4 All ER 785 Mobil Oil Australia Ltd v McKenzie [1972] VR 315 NE Perry Pty Ltd v Judge (2002) 84 SASR 86; [2002] SASC 312 Nordenfelt v The Maxim Nordenfelt Guns & Ammunition Co Ltd [1894] AC 535 O'Grady v Northern Queensland Co Ltd (1990) 169 CLR 356; [1990] HCA 16 OAMPS Insurance Brokers Ltd v Hanna [2010] NSWSC 781 Orton v Melman [1981] 1 NSWLR 583 PMT Partners Pty Ltd (in liq) v Australian National Parks & Wildlife Service (1995) 184 CLR 301; [1995] HCA 36 Patrick Stevedores Operations No 2 Pty Ltd v Maritime Union of Australia (1998) 195 CLR 1 at 47; [1998] HCA 30 Pyle v Sharpe Bros Pty Ltd [1968] 2 NSWR 511 Redland Bricks Ltd v Morris [1970] AC 652 Sidameneo (No 456) Pty Ltd v Alexander [2011] NSWCA 418 Stenhouse Australia Ltd v Phillips [1974] AC 391 Stokely-Van Camp Inc v New Generation Beverages Pty Ltd (1998) 44 NSWLR 607 Tullett Prebon (Australia) Pty Ltd v Purcell [2008] NSWSC 852; [2008] 175 IR 414 Twenty-First Australia Inc v Shade (Supreme Court (NSW), Young J, 31 July 1998, unrep) Veda Advantage (Australia) Pty Ltd v De Beer [2016] NSWSC 37 Winnipeg Livestock Sales Ltd v Plewman [2000] 192 DLR (4th) 525 Woolworths Limited v Olson [2004] NSWCA 372 WR Carpenter Aust Ltd v Kleisterlee (1988) ATPR 40-913 Wright v Gasweld Pty Ltd (1991) 22 NSWLR 317 Texts Cited: GE Dal Pont, Law of Confidentiality (1st ed, 2015, LexisNexis Butterworths) Prof JD Heydon, The Restraint of Trade Doctrine (4th ed, 2018, LexisNexis Butterworths) Category: Principal judgment Parties: Nassif Isaac (otherwise known as Norman Isaac) (Appellant) Dargan Financial Pty Ltd ATF The Dargan Financial Discretionary Trust (ABN 68 702 047 521) (trading under the name of "Home Loan Experts") (Respondent) Representation: Counsel: Mr A Moses SC / Mr T Brennan (Appellant) Mr M Young SC (Respondent)

Solicitors: Kennedys (Appellant) Bransgroves Lawyers (Respondent) File Number(s): 2017/275951 Decision under appeal Court or tribunal: Supreme Court of New South Wales Jurisdiction: Equity Division Citation: [2017] NSWSC 1077 Date of Decision: 16 August 2017 Before: Sackar J File Number(s): 2017/66434

[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.] HEADNOTE [This headnote is not to be read as part of the judgment.] Mr Nassif (Norman) Isaac was engaged by Dargan Financial Pty Ltd (Dargan), trading as Home Loan Experts, as a sub-originator to submit and manage loan applications to lenders on behalf of clients through a computer platform provided by Connective Broker Services Pty Ltd. The Sub-Origination Agreement (the Agreement) between Mr Isaac and Dargan was terminated by mutual consent on 30 November 2016. In December 2016, Mr Isaac commenced work as a loan writer/credit representative for RAMS Financial Group Pty Ltd (RAMS) and acted as a loan writer at RAMS for nine persons (referred to as the "Lost Borrowers") who had existing loans with Dargan. Dargan commenced proceedings against Mr Isaac in the Supreme Court alleging that Mr Isaac breached the contractual confidentiality provisions in cls 7.4, 7.5 and 8.2 of the Agreement and an equitable obligation of confidence, by using and retaining a list of Dargan's clients, and breached the non-solicitation restraint (cl 8.3) and the non-interference restraint (cl 8.4), by approaching and accepting approaches from the Lost Borrowers. Mr Isaac admitted retaining and using a list of Dargan's clients (referred to as the "Retained List"), soliciting clients of Dargan and accepting approaches from the Lost Borrowers while employed by RAMS. However, Mr Isaac argued that the Retained List lacked the necessary quality of confidence because the names and contact details of certain clients had entered the public domain. Mr Isaac also argued that the restraints contained in cls 8.3 and 8.4 were unreasonable restraints of trade and accordingly unenforceable. The primary judge (Sackar J) upheld Dargan's claim. His Honour made orders permanently restraining Mr Isaac from disclosing or using the contents of Dargan's client list, and restraining Mr Isaac until 30 May 2018 from soliciting, canvassing, approaching or accepting any approach from any person for any purpose connected with the business of arrangement of finance or loan origination. His Honour also ordered that Mr Isaac pay Dargan $66,029.73 in damages and Dargan's costs of the proceedings. Mr Isaac appealed and argued that the primary judge erred in: finding that the non-solicitation and non-interference restraints were not unreasonable. finding that Mr Isaac breached the non-interference restraint by approaching or accepting approaches from the Lost Borrowers following termination of the Agreement. granting an injunction permanently restraining Mr Isaac's disclosure or use of information in the client lists. Held (appeal allowed in part) (Gleeson JA, Bathurst CJ and Beazley P agreeing): Whether Mr Isaac breached the non-interference restraint Whether Mr Isaac interfered with an existing relationship between Dargan and its clients is a question of fact to be determined in each case: at [91]. The first Lost Borrower sought to refinance her loan using Mr Isaac at RAMS to obtain a better deal. The circumstances in which the refinance was provided was resolved by Dargan and Mr Isaac via email correspondence that was not provided to the Court on the appeal. As such, it was not possible to conclude that Mr Isaac interfered with the relationship between Dargan and the first Lost Borrower: at [92]-[94]. Mr Isaac did not interfere with an existing relationship between Dargan and the second, third, fourth, fifth, sixth and ninth Lost Borrowers. This is because Mr Isaac acted for the Lost Borrowers on a new loan while at RAMS, not a refinance of a loan originated through Dargan: at [95]. The evidence was insufficient to show whether loans for the seventh and eighth Lost Borrowers involved a refinance of existing loans originated through Dargan: at [96]. Whether the non-solicitation and non-interference restrains were unreasonable Given that the non-interference restraint was not breached, it is only necessary to consider whether the non-solicitation restraint was reasonable: at [103]. Dargan had a legitimate commercial interest in protecting its business from the financial impact it may suffer as a result of clients refinancing their loans with another lender. Dargan also had a legitimate commercial interest in preserving confidential information in relation to its clients: at [122]-[123]. Pyle v Sharpe Bros Pty Ltd [1968] 2 NSWR 511; Mobil Oil Australia Ltd v McKenzie [1972] VR 315; and WR Carpenter Aust Ltd v Kleisterlee (1988) ATPR 40-913, considered. Given Dargan's legitimate protectable interest in its customer connections and preserving confidential information relating to its clients, there was no error in the primary judge's finding that the non-solicitation restraint was not unreasonable: at [132]. Whether error in granting injunctive relief The contractual confidentiality provisions in the Agreement should be construed as limited only to information which is confidential in character: at [137]. Maggbury Pty Ltd v Hafele Australia Pty Ltd (2001) 210 CLR 181; [2001] HCA 70, applied. The client list entered the public domain when it was tendered in open court by Dargan without any confidentiality order being sought or made. As such, there was no utility in granting an injunction to permanently restrain the use and disclosure of information that had entered the public domain: at [174]. Johns v Australian Securities Commission (1993) 178 CLR 408; [1993] HCA 56, applied.

[1971] HCA 71

[1998] HCA 42

[2002] SASC 312

(1973) 133 CLR 288

(1973) 129 CLR 99

(1971) 125 CLR 353

(2006) 71 NSWLR 9

(1998) 193 CLR 605

(1979) 142 CLR 177

(1936) 55 CLR 499

(1993) 178 CLR 408

(1950) 83 CLR 628