Solicitors:
Haywards Solicitors (Plaintiff)
CCI Lawyers (Defendant)
File Number(s): 2016/42845
[2]
Judgment
HIS HONOUR: There is listed before me today two notices of motion. One is an application by the plaintiff for interlocutory injunctive relief to enforce covenants in restraint of trade. The other is an application by the defendant for a stay of the proceedings, or for the proceedings to be transferred to the Supreme Court of Victoria.
In June 2008 the defendant was employed by the plaintiff with the title Divisional-Manager Corporate Risks. His employment was terminated on 5 November 2015. The plaintiff carries on business as a risk advisory and insurance broking firm. It has offices throughout Australia, including Sydney and Melbourne. Clause 7.4(a) of the plaintiff's employment contract included a covenant that for a period of 12 months after cessation of his Engagement he would not directly or indirectly solicit, or seek to procure, orders of business from, or the custom of, any person, firm or company who during the 12 months immediately before the termination of his Engagement was a client with whom he had had dealings, or a prospective client with whom he had had dealings. Clause 7.4(b) provided that for a period of 12 months after cessation of his engagement the defendant would not "directly or indirectly do business with or for any such person, firm or company as is referred to in sub-clauses 7.4a(i) and (ii) above".
The contract of employment recited that the plaintiff operates a general retail insurance broking and insurance services business throughout Australia. It names the defendant as the "Executive" and gives as his address an address in a suburb of Melbourne.
During the course of his employment the defendant worked with clients from the Melbourne office of the plaintiff. It is common ground that he is domiciled in Victoria.
Clause 10 of the contract of employment provided:
"10.1 The parties agree that the proper law governing the interpretation and enforcement of this Agreement including all substantive rights and obligations and the manner mode and method of performance shall be the law of the State of the Executive's domicile and the parties further expressly agree to submit to the jurisdiction of the appropriate courts of the State of domicile of the Executive in respect of any dispute of any nature whatsoever arising pursuant to or in connection with the provisions of this Agreement."
These proceedings were commenced on 10 February 2016. On that day the plaintiff obtained from the Chief Judge in Equity an order for short service of its summons and notice of motion and supporting affidavit. On 18 February 2016 the Duty Judge fixed for hearing both the plaintiff's notice of motion that seeks interlocutory injunctive relief and the defendant's notice of motion that seeks a stay or transfer of the proceedings.
The defendant submits that clause 10 of the contract of employment is a submission to the exclusive jurisdiction of the Courts in Victoria, that being the State of the defendant's domicile and that the plaintiff's application both for interlocutory and final relief should be dealt with by the Courts of that State. He proffered an undertaking against the solicitation of clients in substance in the form of the covenant in clause 7.4(a) of the employment agreement and opposes an interlocutory injunction to enforce terms of clause 7.4(b) of the employment agreement.
The first question is whether the proceedings should be transferred to the Supreme Court of Victoria to deal with both the plaintiff's claims for final relief and its claims for interlocutory injunctive relief. The plaintiff says that even if the proceedings are transferred, nonetheless I should deal with the claim for an interlocutory injunction to enforce clause 7.4(b) of the employment agreement, that is to say to make an order whose effect would be to restrain the defendant from working for clients with whom he had previously dealt when employed by the plaintiff notwithstanding that they may have moved to his new employer without any solicitation on his part.
It is clear that it is in the interests of justice that the proceedings be transferred to the Supreme Court of Victoria. Clause 10 is a powerful indication, if not a conclusive matter in that regard (Asciano Services Pty Ltd v Australian Rail Track Corp Ltd [2008] NSWSC 652 at [18]). And irrespective of clause 10 the proceeding involves a claim by the plaintiff which is a substantial corporate entity with offices throughout Australia against its former employee who lives in Melbourne. The claim relates to alleged breaches of contract which, if they occurred, would have occurred in Melbourne. The relevant witnesses, at least on the defendant's side, would appear to be in Victoria and the events giving rise to the litigation took place in Victoria.
This, however, is not in itself a sufficient reason for not dealing with the claim for interlocutory injunctive relief. But if, as the defendant submits, clause 10 is a submission to the exclusive jurisdiction of the Courts of Victoria, then effect should be given to that clause both in respect of the claims for final relief and the claim for interlocutory injunctive relief.
Clause 10 does not expressly state that the parties agree to submit any dispute to the exclusive jurisdiction of the Courts of domicile of the Executive. That is not conclusive. It is well settled that the question whether a clause providing for a submission to jurisdiction is a submission to the exclusive jurisdiction of the nominated courts is a question of construction, and that the use or absence of the word "exclusive" is not determinative.
In FAI General Insurance Co v Ocean Marine Mutual Mutual Protection and Indemnity Association Ltd (1997) 41 NSWLR 117 Giles CJ Comm Div (as his Honour then was) said at 126-127:
"(a) Whether a jurisdiction clause is an exclusive jurisdiction clause is a question of construction of the particular contract, with such regard to the circumstances surrounding the entry into the contract as is permissible.
(b) The word 'exclusive' is not determinative, and a clause may be held to be an exclusive jurisdiction clause notwithstanding the absence of that or a similar word or phrase: as was said in Continental Bank NA v Aeakos Compania Naviera SA (at 594), it would be a surrender to formalism to require a jurisdiction clause to provide in express terms that the chosen court is to be the exclusive forum.
(c) Although mutuality, in the sense that both parties agree to the relevant
jurisdiction, has been thought to point to exclusive jurisdiction, I have some difficulty seeing why that should be so. Lack of mutuality is likely to tell against exclusive jurisdiction (Continental Bank NA v Aeakos Compania Naviera SA), but mutuality is consistent with no more than submission to the jurisdiction. However, when taken with other matters mutuality may assist in finding a contractual intention that disputes shall be submitted only to the courts of the relevant jurisdiction: British Aerospace Plc v Dee Howard Co; Austrian Lloyd Steamship Co v Gresham Life Assurance Society Ltd.
(d) Other language in the clause or the nature of the contract may point
towards that contractual intention, for example 'under the jurisdiction of the English courts' and the assumed desire for certainty in Sohio Supply Co v Gatoil (USA) Inc; or the use of transitive language as in Austrian Lloyd Steamship Co v Gresham Life Assurance Society, Ltd, British Aerospace Plc v Dee Howard Co and Continental Bank NA v Aeakos Compania Naviera SA.
(e) If the courts of the relevant jurisdiction would have jurisdiction in the
absence of the clause, that may indicate that the clause was intended to confer exclusive jurisdiction: Sohio Supply Co v Gatoil (USA) Inc; Gem Plastics Pty Ltd v Satrex Maritime (Pty) Ltd. It will not always be so, as the clause may have been intended only to put beyond doubt the existing jurisdiction (S & W Berisford Plc v New Hampshire Insurance Co), or be an unthinking inclusion."
As his Honour noted at paragraph (e) quoted above, if the nominated Court would have jurisdiction in the absence of a submission to the nominated Court's jurisdiction, that may indicate that the clause was intended to confer exclusive jurisdiction. It is a question of what the parties are taken to have meant by the words that they have used.
In the present case the contract was made in 2008. That is, it was made long after the Service and Execution of Process Act 1992 (Cth) was enacted that provided by s 15 that an initiating process issued in a State may be served in another State and provided by s 12 that, subject to the Act, service of a process under the Act has the same effect and may give rise to the same proceedings as if the process had been served in the place of issue. As the learned authors of Nygh's Conflict of Laws in Australia 8th ed say (at [3.16]), the effect of these provisions is that:
"… the jurisdiction of each State Supreme Court now extends to the boundaries of the Commonwealth, with the effect that Australia is a single jurisdictional area at least so far as personal jurisdiction is concerned."
Thus the submission to jurisdiction in clause 10 of the employment agreement was unnecessary if its purpose was to give jurisdiction to the Courts of the State of the Executive's domicile. In clause 10 the word "State" must mean a State of Australia. I do not read the clause as providing that the parties submit to the jurisdiction of whatever country the Executive might be domiciled in at the time proceedings are commenced.
The submission in clause 10 is in respect of "any dispute of any nature whatsoever arising pursuant to or in connection with the provisions of this agreement". "Any dispute" must mean all disputes. The dispute as to whether interlocutory injunctive relief should be given falls within clause 10.1.
What then is the effect of the parties' agreement to submit to the jurisdiction of the Courts of Victoria in respect of the dispute as to whether an interlocutory injunction should be given to restrain the alleged breach of the restraint of trade in the employment agreement? The Supreme Court of Victoria would have jurisdiction to entertain such dispute in the absence of the clause, as would the Supreme Courts of the other States and Territories.
By the parties agreeing to submit such a dispute to the appropriate Courts of the State of domicile they must in my view mean that they agree that in the events that have happened, it is the Supreme Court of Victoria that should hear and determine that application. In other words that is a submission to the exclusive jurisdiction of the Courts of Victoria. Effect should be given to that contract by enforcing the clause.
It is not necessary to stay the proceedings in order to enforce the parties' agreement in clause 10. The plaintiff has said that it will seek to proceed with its claim for an interlocutory injunction in Victoria if the proceeding is transferred there. There is jurisdiction under s 5(2) of the Jurisdiction of Courts (Cross-Vesting) Act 1987 (NSW) to transfer the proceeding to Victoria and it is clearly in the interests of justice to do so. (Indeed it would be in the interests of justice to do so even if clause 10 were not a submission to the exclusive jurisdiction of the Courts of that State.) Effect can be given to clause 10 by ordering a transfer rather than a stay.
The plaintiff submits that this Court should nonetheless deal with its claim for an interlocutory injunction. It points out that orders were made for the service of affidavits in relation to the plaintiff's application. Those affidavits were read because both motions were listed for hearing today. But I have not heard any oral submissions in relation to the claims for interlocutory relief.
The plaintiff says that consistently with s 56 of the Civil Procedure Act 2005 (NSW) its claim for an interlocutory injunction should be heard and determined, otherwise there will be delay and additional costs. There is some force in that submission, but it appears to me that where the parties have contracted for this dispute to be heard in Victoria, they should be held to that contract. The plaintiff has itself to blame for the delay that will arise from the transfer of the proceedings to Victoria. It could and should have commenced proceedings there. The plaintiff says that it acted properly in instituting proceedings in this Court, but the question does not depend upon whether or not the institution of proceedings in this Court is an abuse of process, but whether it was in accordance with, or contrary to, the parties' contract. Nor will the costs that have been spent in the preparation of the affidavits and outline of written submissions be wasted. Those affidavits and submissions will be available for use in Victoria.
As I have said, the plaintiff offers an undertaking in substance in accordance with 7.4(a) of the contract. It also undertakes to do everything necessary on its part to obtain a prompt hearing in Victoria of the plaintiff's claims for interlocutory and final relief.
For these reasons I make the following orders subject to any submissions counsel may have as to the appropriate form of the orders, namely:
Upon the plaintiff by its counsel giving the usual undertaking as to damages, note the undertaking given by the defendant through his counsel to the Court that until the final determination of these proceedings or earlier further order, he will not on his own account or in association with any other person or entity directly or indirectly solicit or seek to procure any order for business from, or the custom of, any person or entity who during the twelve months preceding 5 November 2015 was:
(a) a client of the plaintiff with whom the defendant had dealings during the said 12-month period being the clients set out in annexure C to the affidavit of Damian Schinck dated 9 February 2016; or
(b) an employee or contractor of the plaintiff.
Note the undertaking of the defendant through his counsel to the Court to do all things necessary on his part to seek an expedited hearing of the plaintiff's claims for final and injunctive relief in the Supreme Court of Victoria.
Order that these proceedings be transferred to the Supreme Court of Victoria.
Order that the plaintiff pay the defendant's costs of the defendant's notice of motion filed on 17 February 2016.
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Decision last updated: 29 February 2016