Judgment
1CAMPBELL JA : There is a preliminary question in these proceedings about whether leave to appeal was needed, and if so, whether it should be granted. For the purpose of considering those matters, I will state in summary form some of the salient facts notwithstanding that they appear more fully in the judgment of Meagher JA.
2Mr Jardin had been an employee of Metcash. After he had fallen out with Metcash, and a dispute had arisen about the basis on which he and Metcash should part company, they entered into a Termination Deed. While it remained on foot, Metcash was obliged to pay him $56,185.75 per month, and he was bound by certain restrictive covenants that had been set out in his contract of employment (" the Employment Deed ").
3Mr Jardin gave three months notice on 26 July 2010, terminating the Employment Deed. There was a dispute in the court below about whether Mr Jardin was entitled to bring the Employment Deed to an end by three months notice, or whether (save in the case where he was summarily dismissed, a possibility that did not arise) the Employment Deed would not terminate until 1 March 2011.
4Before 26 July 2010, Mr Jardin had taken some preparatory steps towards commencing an association with SPAR Australia, a competitor of Metcash. In the court below, Metcash sought injunctions to enforce the restrictive covenants.
5The primary judge held that Mr Jardin was entitled to give the three months notice of termination of the Employment Deed, and thus that the Deed had come to an end on 16 October 2010. However, he held that the restrictive covenants should be enforced not only for the period to 16 October 2010, but also for an additional period of 35 days expiring on 30 November 2010. He explained that additional period as being justified under the "springboard" or "head start" doctrine, and as arising from the fact that over a period of 35 days in July and early August 2010 Mr Jardin had been conducting discussions with SPAR Australia concerning his proposed role with that company.
6On 29 September 2010 the primary judge made orders that restrained Mr Jardin and his family company up to 30 November 2010. Thus, the effective length of the restraint was a little over two months.
7In broad terms, the injunctions prohibited Mr Jardin from either acquiring more than a 5 percent interest in SPAR Australia, or taking any position as an employee, director or officer of SPAR. The effect of the injunction against Mr Jardin acquiring an investment in SPAR, was that a transaction then on foot whereby Mr Jardin's family company would invest $2 M in SPAR could not proceed until the injunction expired.
8On 22 December 2010 Mr Jardin and his family company filed a Notice of Appeal. It sought, in the most extensive of the claims for relief it made, that all the primary judge's orders be set aside.
9On 20 January 2011 Metcash filed a Notice of Cross Appeal. It sought orders extending the injunctions up until 1 March 2011, and sought the setting aside of a declaration made by the trial judge to the effect that Mr Jardin had been entitled to terminate the Employment Deed by three months notice.
10By the time the Notice of Appeal was filed, the injunctions that it sought to set aside had in any event expired by effluxion of time.
11If the Notice of Cross Appeal could have been heard as soon as it was filed, and if it had succeeded, the extension of the injunctions up to 1 March 2011 would have provided a practical point to the cross-appeal. However, by the time the matter actually came on for hearing in September 2011, that practical point had disappeared.
12Both the Notice of Appeal, and the Notice of Cross Appeal, purported to be filed without leave. Notwithstanding the requirements of UCPR 51.22 (which applies to cross appeals pursuant to UCPR 51.3), no affidavit was filed setting out the material facts on which either the Appellant or the Cross Appellant relied to show that there was an appeal, or cross-appeal, as of right.
13The filing of such an affidavit is no mere technicality. The jurisdiction of this Court to hear appeals exists only because it is conferred by statute. There are numerous types of decisions of courts or tribunals concerning which no right of appeal exists at all, and many types of decisions concerning which a right of appeal exists only if this Court grants leave to appeal. Orderly conduct of appeals requires that whether the Court has jurisdiction to hear a particular purported appeal, and if so the basis on which it has that jurisdiction, be established, and established early.
14The Appellants, after being reminded by the court, sought to remedy their default by filing an affidavit of the Appellants' solicitor in court on the day of the hearing of the appeal. The Court had raised the matter because of a concern about whether it was appropriate for the matter to proceed at all if success on the part of either side would have no practical consequences.
15Failure to seek leave, in cases when it is required, can lead to a purported appeal being dismissed as incompetent: Coles v Wood [1981] 1 NSWLR 723 at 727; Southern Cross Exploration NL v Fire & All Risks Insurance Company Ltd (No. 2) (1990) 21 NSWLR 200 at 210 (Kirby P), 214 (Mahoney JA), 218 (Handley JA). That is the consequence of the court lacking jurisdiction to hear the appeal if leave is needed but has not been granted. However, in cases where a respondent did not object to competency, or did not object to competency until the hearing of a purported appeal, the court has on occasions been willing to treat the purported appeal as an application for leave to appeal: Carolan v AMF Bowling Pty Ltd [1995] NSWCA 69 at 3; Falamaki v Wollongong City Council [2001] NSWCA 55 at [18]. In the present case, the court permitted the hearing to proceed as a concurrent hearing.
16The affidavit of the Appellants' solicitor propounded two bases upon which the Appellants contended that the appeal by Mr Jardin was competent, and a separate basis upon which the appeal by his family company was contended to be competent.
17All those ways of justifying the competence of the appeal depended on s 101(2)(r)(ii) Supreme Court Act 1970 . There is an appeal as of right pursuant to that subsection concerning an appeal:
"(ii) that involves (directly or directly) any claim, demand or question ... respecting any ... civil right amounting to or of the value of $100,000 or more."
18The first basis on which the Appellants contended that s 101(2)(r)(ii) is satisfied is that Mr Jardin commenced employment with SPAR Australia on 1 December 2010. A corporate entity associated with him has been paid approximately $256,666 (including GST) concerning that employment for the period 1 December 2010 to 1 March 2011. I would infer that, had he not been restrained by the injunction, Mr Jardin would have taken up employment with SPAR Australia approximately two months earlier than when he actually took up that employment. Had he taken up the employment, the remuneration during those two months would have been of the order of $128,333.
19However, I do not accept that that is sufficient to attract s 101(2)(r)(ii).
20The relevant question, for s 101(2)(r)(ii) is the value of the right involved in the appeal, not the value of any right that was involved in the proceedings below. That is a significant respect in which s 101(2)(r) differs from the provisions of s 35 Judiciary Act 1903 (Cth) on which it is loosely based: Blackmore v Browne; Kara Kar Holdings Pty Ltd v Blackmore [2011] NSWCA 114 at [31]-[32]; Hansen v Slattery Transport (NSW) Pty Ltd [2011] NSWCA 193 at [2]; Jensen v Ray [2011] NSWCA 247 at [10]-[12].
21In Pawlowska v Zajglic [2011] NSWCA 118 at [14]-[21] I set out authorities to the effect that an appeal involves a claim, demand or question concerning a civil right amounting to or of the value of $100,000 or more only if success on the appeal would confer on the Appellant a benefit worth $100,000 or more. Success on the present appeal would not result in Mr Jardin having an entitlement to be paid the $128,333 that would have been paid had he been free to take up employment with SPAR from 29 September 2010.
22Another basis that the Appellants put forward is that if Metcash had succeeded in the court below in its contention that the Deed of Release continued until 1 March 2011, Metcash would have been liable under the terms of the Deed of Release to pay to Mr Jardin, during the additional period of 27 October 2010 to 1 March 2011, an amount slightly more than $224,743.
23In my view, that fact does not show that the appeal is competent. On the appeal, the Appellants do not assert any claim that the Deed of Release did not terminate until 1 March 2011. That fact does not provide a reason why the Appellants would be better off to the extent of $100,000 by succeeding in the appeal.
24The third basis on which competency is put forward is that the proceedings below also involved a claim, demand or question in respect of the family company's civil right to make an investment in SPAR Australia. It is contended that the value of that civil right was $2 m, the amount proposed to be invested.
25If the proposed appeal in the present case were to succeed it is not as though that would enable the Appellants to make an investment in SPAR that they could not otherwise make. All the injunction did was to delay their making of that investment for approximately two months, and those two months have now passed.
26Further, (if this matters, which I suspect it does not) even though the capital amount of the investment proposed to be made was $2 m, there is no evidentiary basis before us for concluding that a two-month delay in making a capital investment of $2 m itself has a value of more than $100,000.
27The primary judge ordered Mr Jardin to pay the costs of Metcash insofar as those cost related to the claim against him, and made no order as to the costs between Metcash and the family company. The affidavit that seeks to establish competency shows that Metcash's solicitors have claimed in excess of $686,000 from Mr Jardin pursuant to the costs order. Mr Jardin's own costs in the court below exceed $300,000, while Mr Jardin's family company's costs exceeded $100,000.
28The amount of those costs is not a matter that goes to whether s 101(2)(r) has been satisfied. Costs are left out of account for the purpose of calculating whether the $100,000 threshold has been passed, as that threshold concerns the amount at stake in the subject matter of the claim: Gurr v Robinson (NSW Court of Appeal, 10 February 1986, unreported) at 2-3 per Kirby P; Harbrett Pty Ltd v Butler (NSW Court of Appeal, 14 December 1989, unreported) per Gleeson CJ, Clarke and Meagher JJA agreeing); Built Interiors Pty Ltd v Three Dinosaurs Pty Ltd [2003] NSWCA 290 at [35] (Mason P, Meagher and Ipp JJA agreeing); Coshott v Shipton Lodge Cobbitty Pty Ltd [2006] NSWCA 316 at [14] (Basten JA).
29Thus, the appeal is not one that can proceed as a matter of right.
30The court always has power to act to ensure that its processes are not abused. One aspect of this power is that it can act to halt proceedings (including an appeal) that pose a question that has become moot, ie that will produce no foreseeable consequence for the parties. White J collected authorities concerning that principle in State of South Australia v Lampard-Trevorrow [2008] SASC 370 at [20]-[24].
"Courts do not ordinarily, as a matter of principle, determine proceedings which involve issues which are not live as between the parties. The aversion of courts to determining issues which are moot, hypothetical or academic is well known: Ainsworth v Criminal Justice Commission [1992] HCA 10; (1992) 175 CLR 564 at 582; Bass v Permanent Trustee Co Ltd [1999] HCA 9 at [45] [49], (1999) 198 CLR 334 at 355-357; Victims Compensation Fund Corporation v District Court of New South Wales [2002] NSWCA 355 at [27]; Rapson v WorkCover Corporation [2007] SASC 172 at [10]-[16], (2007) 98 SASR 86 at 90-92. In relation to an appeal, it was said by each of Mason J and Aickin J in Gardner v The Dairy Industry Authority of New South Wales (1978) 52 ALJR 180 that the Court should not determine an appeal which would produce 'no foreseeable consequences for the parties': Ibid at 188, 189
The authorities reveal a number of circumstances in which appeals have been dismissed or stayed because they had no practical utility. In Sun Life Assurance Co of Canada v Jervis [1944] AC 111 an insurer was granted leave to appeal to the House of Lords upon its undertaking to pay the costs of the appeal as between solicitor and client in any event, and upon its further undertaking not to ask for the return of any money ordered to be paid under the order which was the subject of the appeal. The House of Lords held that it was inappropriate to hear to the appeal. Viscount Simon LC said:
'The difficulty is that the terms put on the appellants by the Court of Appeal are such as to make it a matter of complete indifference to the respondent whether the appellants win or lose. The respondent will be in exactly the same position in either case. He has nothing to fight for, because he has already got everything that he can possibly get, however the appeal turns out, and cannot be deprived of it. I do not think that it would be a proper exercise of the authority which this House possesses to hear appeals if it occupies time in this case in deciding an academic question, the answer to which cannot affect the respondent in any way. If the House undertook to do so, it would not be deciding an existing lis between the parties who are before it, but would merely be expressing its view on a legal conundrum which the appellant which the appellants hope to get decided in their favour without in any way affecting the position between the parties ... Ibid at 113.'
Similarly, in Hole v Insurance Commissioner [1962] VR 394 the Full Court of the Victorian Supreme Court refused to hear an appeal on learning that the judgment debt had been paid by the defendant prior to the hearing of the appeal and that the parties had agreed that the money should not be repaid, nor a retrial sought, should the appeal succeed. I note, however, that in GIO General Ltd v Newcastle City Council (1996) 38 NSWLR 558 at 566 the New South Wales Court of Appeal did not appear to consider the agreement of the insurer not to dispute its liability to indemnify the insured in relation to certain claims to be an impediment to the hearing and determination of one of the appeals then before it.
The decision in Sun Life Assurance Co was applied by Starke J in Cadbury-Fry-Pascall Pty Ltd v Federal Commissioner of Taxation (1944) 70 CLR 362 at 386 in relation to taxation which the Commissioner had undertaken not to seek to recover, and was referred to with approval by Mullighan J, at first instance, in NZI Insurance Australia Ltd v Baryzcka and Anor [2002] SASC 16 at [6], (2002) 85 SASR 482 at 485.
Other examples of circumstances in which courts have refused to hear appeals, or to grant permission to appeal, when the determination of the appeal would produce no practical consequence include Harrington v Rich [2008] FCAFC 61; (2008) 166 FCR 440; Secretary to the Department of Human Services v Magistrates' Court at Melbourne [2002] VSCA 171; at [19]-[21] (2002) 6 VR 140 at 147-8; Hope Downs Management Services v Hamersley Iron Pty Ltd [1999] FCA 1652 and Beitseen v Johnson (1989) 29 IR 336 at 338."
31Even concerning an appeal that was begun without any need for leave, the court has power to stay the appeal if later events show that the questions involved in it have become moot between the parties: Hope Downs Management Services v Hamersley Iron Pty Ltd [1999] FCA 1652 at [13]; Tchoylak v Minister for Immigration and Multicultural Affairs [2001] FCA 872; (2001) 111 FCR 302; AMACSU v Ergon Energy Corporation Ltd [2005] QCA 351 at [77].
32However, the Court also has a discretion to permit such an appeal to proceed, if a practical point would be served by doing so: Bonan v Hadgkiss [2007] FCAFC 113; (2007) 160 FCR 29 at [8]. One circumstance that has been held to provide such a reason for proceeding with the appeal is if the decision is likely to affect other cases: People with Disability Australia Inc v Minister for Disability Services [2011] NSWCA 253 at [6], [13]-[15]; Long v Minister for Immigration and Multicultural and Indigenous Affairs [2002] FCAFC 438; Minister for Immigration and Multicultural and Indigenous Affairs v Al Masri [2003] FCAFC 70; (2003) 126 FCR 54; Hope Downs Management Services v Hamersley Iron Pty Ltd ; Bonan v Hadgkiss ; Marion White Ltd v Francis [1972] 1 WLR 1423 (where the enforceability of a standard form of restrictive covenant was in question - 1428B). Another is if a live question of costs depends on the outcome of the appeal: Lampard-Trevorrow at [25]-[27]. However, it is a question for the court whether a live issue in respect of costs should result in an otherwise moot appeal proceeding to full hearing and determination: Long v Minister for Immigration and Multicultural and Indigenous Affairs .
33These principles apply equally to whether it is appropriate to grant leave to appeal concerning a matter in which the question of whether the principal relief claimed should be granted has become moot.
34Mr Neil SC, counsel for the Appellants, submits that there are three matters that justify the grant of leave to appeal. The first is that there is a question of principle involved concerning whether the judge was correct in using the springboard doctrine as a basis for granting an injunction restraining the Appellants until a date that was 35 days later than the date until which they had contracted to restrict their activities. The second is that, even if the amount claimed by Metcash's solicitors under the primary judge's costs order is reduced somewhat on assessment, the costs order is likely to involve a very large sum of money. The third is that the correctness of the costs order turns on whether the judge was correct in restraining the Appellants at all, or alternatively in restraining them for the extra 35 days beyond the end of the contractual period. There is particular significance in those extra 35 days because the Appellants had made a Calderbank offer to restrict their activities, in the same respects as the restrictive covenant required, for five days beyond the end of the contractual period.
35Even though I accept that there is an important question of principle about the availability of the springboard doctrine in crafting an injunction to enforce a contractual obligation, I will not to base my decision about the granting of leave to appeal solely on the importance of that question of principle. It could only be in rare circumstances, if ever, that a court was justified in reaching a decision on legal question that had no practical consequences for either of the parties: Gardner v Dairy Industry Authority of New South Wales [1977] 18 ALR 55 at 60, 69. However, in the present case, the judge's application of the springboard principle is one of the matters that is relevant to his decision concerning costs. For that reason it, at least in the potential way in which the matter should be considered when deciding whether to grant leave to appeal, has practical consequence for the parties.
36In my view this is a case in which it would be appropriate to grant leave to appeal, even though the only practical consequence of success for the Appellants might be modification of the costs orders made below. The sums of costs involved are alarmingly large. The Respondent's claimed costs and disbursements for preparation and the hearing itself, average more than $100,000 per hearing date. That is an amount which makes one wonder whether, if that is the cost of litigating in the Supreme Court, the court is continuing to perform its public function of providing a forum for resolution of disputes that is in practical terms available to citizens who are in dispute. Even for a successful business executive like Mr Jardin the total amount of costs at stake would be significant. Notwithstanding the usual reluctance of the court to permit appeals that in practical terms relate only to costs, in the present case the sheer size of the costs is such that justice requires that the Appellants be given the opportunity to question the legal basis on which those costs were awarded.
37The competence of the cross-appeal has not been demonstrated. However, the issues that arise on the cross-appeal are so bound up with the issues that arise on the appeal that granting leave to appeal concerning the appeal requires the grant of leave to appeal concerning the cross-appeal.
38I have read the draft reasons of Meagher JA concerning the substantive issues raised in the appeal and cross-appeal. I agree with those reasons, and with the orders his Honour proposes.
39YOUNG JA: I affirm my agreement with Campbell JA on the preliminary issue as to the need for leave to appeal and the grant of such leave.
40On the merits of the appeal and cross appeal I agree with Meagher JA.
41MEAGHER JA: This appeal from a decision of Ball J concerns the enforcement of restraints given in the context of the termination of the employment relationship between Metcash Trading Ltd ( Metcash Trading ) and Lou Jardin ( Mr Jardin ).
42Metcash Trading is a wholly owned subsidiary of Metcash Ltd ( Metcash ), the listed holding company of a group which markets and distributes food and other consumer goods to independent grocery and liquor retailers. Metcash's principal operating subsidiary is IGA Distribution Pty Limited ( IGA Distribution ) which markets and distributes those consumer goods to IGA branded and non-branded grocery stores and accounts for over 80 percent of Metcash's net earnings.
43Mr Jardin commenced employment in the Metcash business in September 1997. In May 2000 he was appointed CEO of IGA Distribution. On 1 October 2004 Mr Jardin entered into an Employment Deed with Metcash Trading (the Employment Agreement ) under which his employment continued until terminated under cl 12. Clause 12.1(a) permitted Mr Jardin to terminate by three months' written notice. Clause 12.1(b) permitted Metcash Trading to terminate by nine months' written notice. Clause 12.2 permitted Metcash Trading to terminate summarily in the event of serious misconduct.
44Clause 3 of the Employment Agreement set out Mr Jardin's duties and what he was prohibited from doing. It provided:
"3.1 Duties
The Employee must:
(a)perform the duties as may be specified by the Company from time to time whether for the Company or any Related Body Corporate;
...
3.2 Prohibitions
Without limiting the Employee's duties to the Company, the Employee must not:
(a) act in conflict with the Company's best interests;
(b)accept or commence any other employment or engagement without the prior written consent of the Company;
(c)compete with the business of the Company or any Related Body Corporate; or
(d)hold or be interested in any investments which amount to more than 5 percent of the issued investments of any class of any one company except where agreed to by the Company or to the extent that any excess over 5 percent is attributable to his position as a representative of the Company."
45Clause 10 contained covenants as to the use and disclosure of confidential information which was defined. Clause 15 dealt with what should happen after the termination of employment. Clause 15(c) provided that Mr Jardin's obligations under cl 10 continued after termination other than in respect of information that was part of his "general skill and knowledge". The Employment Agreement did not otherwise contain restraints which continued to operate after the termination of employment.
46In August 2006, Metcash agreed to pay Mr Jardin a long term cash incentive in respect of the five year period ending 30 April 2010 provided certain earnings targets were exceeded. That amount was payable only if Mr Jardin was in full-time employment as at 30 April 2010.
47Over the period to January 2010, tensions developed between Mr Jardin and Mr Andrew Reitzer, the CEO of the Metcash group. On 3 February 2010, Mr Jardin was informed that Metcash had decided to terminate his services. From 5 February 2010 he ceased to perform any of the duties of the CEO of IGA Distribution.
48On 19 February 2010, Metcash and Mr Jardin entered into a Deed of Release. Clause 8(a) provided that Metcash executed it as the agent and trustee for its Related Bodies Corporate which included Metcash Trading and IGA Distribution. That agreement was negotiated by experienced workplace and employment lawyers acting for each of the parties. There are issues as to its interpretation and as to how it affected the continued operation of the Employment Agreement.
49On 17 February 2010, Metcash appointed Mr Silvestro Morabito as CEO of IGA Distribution. On 1 June 2010, in accordance with cl 1(a) of the Deed of Release, Metcash Trading gave Mr Jardin nine months' written notice terminating his employment.
50On 1 July 2010, Mr Jardin commenced discussions with Mr Leigh Carson, the CEO of SPAR Australia Ltd ( SPAR Australia ), in relation to an investment in that business. Those negotiations continued over the period from 1 July to 4 August 2010. SPAR Australia is a franchisor in the retail grocery industry. In mid-2010 it had about 150 franchisee stores similar to the IGA Distribution stores licensed by Metcash. It was a competitor of Metcash.
51On 16 July 2010, a number of things happened. Mr Jardin gave a written notice to Metcash Trading purporting to terminate the Employment Agreement "with immediate effect". Jardim Investments Pty Ltd ( Jardim Investments ) was incorporated. Its sole shareholder and director was Mr Christopher Jardim, who is Mr Jardin's son and was at the relevant time a medical student. SPAR Australia also issued a Media Release which stated:
"Former CEO of IGAD and Executive Director of Metcash Limited, Lou Jardin, has offered to take a majority shareholding in SPAR Australia Limited in a deal the company says will significantly improve the competitiveness of its retailers.
According to SPAR Australia Chairman, Miles Hedge, a Heads of Agreement was signed with Lou Jardin today and the Board will recommend the offer be accepted when it is put to shareholders at an Extraordinary General Meeting to be convened."
52At the time the Media Release was issued, there was a draft Binding Heads of Agreement between Mr Jardin and SPAR Australia. Later, on 16 July 2010, Jardim Investments was substituted for Mr Jardin as a party to that agreement. At the same time Mr Jardin replaced Mr Christopher Jardim as sole director of that company. He then signed the Binding Heads of Agreement on its behalf. That agreement provided for the acquisition by Jardim Investments of a 51 percent interest in SPAR Australia together with the grant of a call option to acquire the remaining interest. Clause 4 provided:
"The Parties agree to negotiate in good faith and to the exclusion of negotiations with all others to enter into a Subscription Agreement and a pro forma Call Option Agreement by Friday August 13 th 2010 or such later date agreed between the Parties."
53On 21 July 2010, Metcash commenced proceedings against Mr Jardin in the Equity Division of this Court. On that day, Mr Jardin gave certain undertakings to the Court. On 26 July 2010, Mr Jardin gave a further written notice purporting to terminate the Employment Agreement with effect from 26 October 2010. He did so relying upon cl 12.1(a). On 12 August 2010, Mr Jardin resigned as a director of Jardim Investments and was replaced by his wife. On 20 August, Mr Christopher Jardim sent a circular communication to the shareholders in SPAR Australia describing what his "family" wanted to achieve by investing in that company and stating that as a "family business we are in this for the long term" and aim "to ensure the long term sustainability of the independent supermarket industry through ensuring that your stores are profitable and price competitive".
54Metcash Trading and Jardim Investments were added as parties to the proceedings and Metcash sought injunctions against Jardim Investments restraining it from entering into any agreement for the acquisition of shares in SPAR Australia. On 31 August 2010, following a contested application, the primary judge made orders that Jardim Investments be restrained "from acquiring or otherwise becoming interested in more than 5 percent of the issued investments of any class of SPAR Australia": [2010] NSWSC 936.