Lamson Concepts Pty Ltd v Schmidt [2025] FCA 677

where Client means any person who, as at 13 December 2024:

1. is or was a person to whom the Applicant provides and/or provided products or services at any time during the 12 months prior to 13 December 2024;
2. has entered into discussions or negotiations with the Applicant at either the person's own initiative or at the initiative of the Applicant at any time during the 12 months prior to 13 December 2024 with a view to receiving products or services provided by the Applicant and who had not notified the Applicant at least 3 months prior to 13 December 2024 that they did not wish to receive such products or services (other than any act the First Respondent had performed, indirectly or directly, in breach of the terms of his contract of employment effective on 1 April 2024, to induce a person to not receive such products or services).

1. As will be seen, these orders reflect aspects of the restraint of trade provisions that appear in the contract of employment Lamson asserts it had with Mr Schmidt.
2. After hearing from the parties, and upon Lamson giving certain undertakings, I made orders in the terms sought by Lamson. These are my reasons for making those orders.

Relevant principles - interlocutory injunctions

1. The relevant principles to be applied in determining an application for an interlocutory injunction are well settled.
2. When an interlocutory injunction is sought in respect of private rights, it is necessary to identify the legal or equitable rights which are to be determined at trial and in respect of which final relief is sought: Samsung Electronics Co. Limited v Apple Inc. [2011] FCAFC 156; (2011) 217 FCR 238 (Samsung) at [52]; citing Australian Broadcasting Corporation v Lenah Game Meats Pty Ltd [2001] HCA 63; (2001) 208 CLR 199 (Lenah Game Meats) at [8]‑[21] (Gleeson CJ), [59]-[61] (Gaudron J), [86]-[92], [98]-[100], [105] (Gummow and Hayne JJ).
3. An applicant for an interlocutory injunction must show that there is a prima facie case for entitlement to the relief sought. In Australian Broadcasting Corporation v O'Neill [2006] HCA 46; (2006) 227 CLR 57 at [65], Gummow and Hayne JJ said that an applicant must demonstrate that there is 'a sufficient likelihood of success to justify in the circumstances the preservation of the status quo pending the trial'. What will be sufficient will depend on the nature of the rights asserted and the practical consequences that are likely to flow from the order sought: Beecham Group Ltd v Bristol Laboratories Pty Ltd [1968] HCA 1; (1968) 118 CLR 618 at 622.
4. An applicant must also demonstrate that the balance of convenience and justice favours the granting of an injunction. In that context, the Court is required to exercise a discretion by assessing and comparing the prejudice and hardship likely to be suffered by the respondent, third persons and the public generally if an injunction is granted, with that which is likely to be suffered by the applicant if no injunction is granted: Samsung at [65]‑[66]. The interaction between the Court's assessment of the likely harm to the applicant, if no injunction is granted, and its assessment of the adequacy of damages as a remedy, will always be an important factor in the Court's determination of where the balance of convenience and justice lies: Samsung at [63].
5. Whether the plaintiff has made out a prima facie case and whether the balance of convenience and justice favours the grant of an injunction are related inquiries and they should not be considered in isolation from each other. The apparent strength of the substantive cases of the parties will often be an important consideration to be weighed in the balance: Samsung at [67].
6. The extent to which the Court will consider the merits of disputes as to legal issues will depend on the circumstances of the case: Samsung at [64] citing Lenah Game Meats at [18] (Gleeson CJ). In examining the strength of a case for an interlocutory injunction, the Court does not undertake a preliminary trial. However, there are some kinds of cases in which it is desirable for the Court to evaluate the strength of the applicant's case for final relief to ascertain where the balance of convenience lies, including cases where the decision to grant or refuse an interlocutory injunction will in a practical sense determine the substance of the matter in issue: Samsung at [74] quoting Kolback Securities Ltd v Epoch Mining NL (1987) 8 NSWLR 533 at 536.
7. As Wheelahan J noted in Avant Group Pty Ltd v Kiddle [2023] FCA 685 at [7], the practical consequences of making or refusing to grant an interlocutory injunction, including whether it would have the effect of finally disposing of the proceedings, is a matter that frequently arises in applications for interlocutory injunctions to enforce restraint of trade clauses and why particular attention may need to be given to the strength of the claim for final relief:

That is because in such cases an interlocutory injunction does not necessarily maintain the status quo pending trial because often the correct view of the status quo is the very matter that is in dispute. While the grant of an interlocutory injunction to enforce a restraint clause might have the effect that the restraint is enforced for much of its duration before there is an opportunity for a final hearing, the refusal of an interlocutory injunction may have the consequence that a plaintiff is denied the primary remedy to which it claims to be entitled in order to enforce a negative contractual covenant. The inadequacy of damages as a final remedy therefore informs the balance of convenience. Damages may be inadequate because once client relationships are severed, they may be difficult to repair, and an award of damages, although possible, may not be the most suitable remedy.

(citations omitted; emphasis in original)

1. Having summarised the general principles to be applied, it is now necessary to explain why I have found that Lamson has a prima facie case for the relief it seeks. However, before doing that, I will first identify the affidavit material relied on by the parties.

1. The parties relied on the following 26 affidavits:

(a) affidavit of Kate Kershaw affirmed on 7 April 2025;

(b) confidential affidavit of Kate Kershaw affirmed 7 April 2025;

(c) affidavit of Glenn Lucas affirmed 7 April 2025;

(d) confidential affidavit of Glenn Lucas affirmed 7 April 2025;

(e) affidavit of Peter Kershaw sworn 7 April 2025;

(f) confidential affidavit of Peter Kershaw sworn 7 April 2025;

(g) affidavit of Kate Kershaw sworn 14 April 2025;

(h) confidential affidavit of Kate Kershaw sworn 14 April 2025;

(i) affidavit of Glenn Lucas affirmed 14 April 2025;

(j) confidential affidavit of Glenn Lucas affirmed 14 April 2025;

(k) affidavit of Kate Kershaw sworn 16 April 2025;

(l) confidential affidavit of Kate Kershaw sworn 16 April 2025;

(m) affidavit of Glenn Lucas affirmed 16 April 2025;

(n) confidential affidavit of Glenn Lucas affirmed 16 April 2025;

(o) affidavit of Peter Kershaw sworn 16 April 2025;

(p) confidential affidavit of Peter Kershaw sworn 16 April 2025;

(q) affidavit of David Schmidt affirmed 23 April 2025;

(r) affidavit of Kate Kershaw sworn 28 April 2025;

(s) confidential affidavit of Kate Kershaw sworn 28 April 2025;

(t) affidavit of Peter Kershaw sworn 28 April 2025;

(u) affidavit of Kathryn MacMillan sworn 28 April 2025;

(v) affidavit of Hayleigh Mottram sworn 29 April 2025;

(w) affidavit of Michael Khoury sworn 29 April 2025;

(x) affidavit of Glenn Lucas affirmed 29 April 2025;

(y) affidavit of David Schmidt affirmed 9 May 2025; and

(z) affidavit of Javid Khan affirmed 9 May 2025.

1. It may be noticed that some of those affidavits are referred to as 'confidential'. I have used that label for the sake of consistency because the affidavits were referred to in that way by the parties. However, questions about whether any parts of those affidavits should be the subject of a suppression order or a non-publication order are yet to be finally determined.
2. At the hearing of Lamson's application for an interlocutory injunction, I advised the parties that given the volume of affidavit material that had been filed, if the parties did not refer to an affidavit in their written or oral submissions, then I would not take that affidavit into account.

1. Mr Schmidt raised objections to various paragraphs in the many affidavits on which Lamson sought to rely. Those objections were set out in a table that was filed with the Court and raised questions of relevance or asserted that certain evidence amounted to inadmissible opinion evidence.
2. It is unnecessary for me to make any rulings on the objections that were made on the basis that the evidence amounted to inadmissible opinion evidence. That is because I have not taken any of that evidence into account in deciding whether the interlocutory injunction sought by Lamson should be granted, in any event.
3. Mr Schmidt's objections to aspects of the evidence relied on by Lamson on the basis that it is irrelevant fall into two categories: firstly, evidence about Mr Schmidt's access to computer equipment, including evidence said to constitute expert evidence, which Lamson relies on to demonstrate the potential for Mr Schmidt to have retained its confidential information; and secondly, evidence relating to Mr Oscuro's alleged activities in the days leading up to his departure from Lamson.
4. Insofar as the first category of Mr Schmidt's objections are concerned, it is also unnecessary for me to rule on those objections, as I have not taken that evidence into account. I have, however, taken the evidence within the second category of Mr Schmidt's objections into account. In order to explain why I am of the view that this evidence is relevant, it is necessary to provide a brief description of the nature of that evidence.
5. In her affidavit of 7 April 2025 at para 104, Ms Kershaw says that on 6 March 2025, Lamson engaged FTI Consulting (FTI) to carry out a forensic review of some electronic devices that were returned to Lamson by both Mr Schmidt and Mr Oscuro on their respective final working days. The report of that review that was prepared by FTI suggested that on 18 November 2024, Mr Oscuro downloaded and/or previewed several electronic folders containing information that is confidential to Lamson, including information about Lamson's products, documents relating to tenders, drawings, schematics and quotes developed by Lamson, and information about Lamson's prospective and current clients: confidential affidavit of Ms Kershaw of 7 April 2025 at paras 13-24.
6. According to paras 25-26 of Ms Kershaw's confidential affidavit:

The process to design an efficient, cost-effective and low-risk PTS system is a niche area, and requires extensive knowledge and experience that is not readily available in the market.

If a competitor were to have that knowledge, as well as the [information apparently downloaded by Mr Oscuro] and access to [a pricing spreadsheet that both Mr Schmidt and Mr Oscuro had access to as Business Development Managers], in my view, this would be extremely detrimental to Lamson Concepts. Using that information, a competitor could contact Lamson Concepts' clients and use the Company's designs and pricing structure to offer effectively the same product at a reduced rate. This is particularly concerning in the case of both Mr Oscuro and Mr Schmidt, who ... directly held a large number of Lamson Concepts' key relationships over an extended period of time, including immediately prior to their departure from the Company.

1. In my view, evidence that Mr Oscuro downloaded or previewed a selection of Lamson's confidential information shortly before he resigned and then set up in business with Mr Schmidt in competition with Lamson could rationally affect the assessment of the probability that Mr Schmidt had access to that same information both before, and then after, his employment with Lamson ended. Evidence that Mr Oscuro had access to such information in those circumstances is logically capable of bearing on the probability that Mr Schmidt had access to similar information when he first became bound by various contractual restraints Lamson alleges were placed on his post-employment conduct when he was promoted to Team Leader. Whether Mr Schmidt had access to such information at that time is relevant to the Court's assessment of the reasonableness of those restraints, which, as will be seen, is material to the question of whether the injunctive relief sought by Lamson should be granted.
2. Further, it may be inferred that the information that Mr Oscuro downloaded or previewed was shared with Mr Schmidt, in furtherance of the business they set up together in Air-Log Australia. That inference is, in turn, capable of establishing that, as at the date of the hearing, Lamson still has a legitimate interest in protecting its confidential information and trade secrets. The existence of that interest at that time is relevant to the question of where the balance of convenience lies and whether, in the exercise of its discretion, the Court should grant the interlocutory relief sought: John Fairfax Publications Pty Limited v Birt [2006] NSWSC 995 (John Fairfax) at [46] (Brereton J).
3. Having identified the evidence relied on by the parties, it is now necessary to consider whether Lamson has a prima facie case.

1. In Boating Syndication of Australia Pty Ltd v BSA Management Qld Pty Ltd [2024] FCA 502 at [81], Markovic J, citing John Fairfax at [5], observed that whether there is a serious question to be tried in a restraint of trade case depends upon whether it is seriously arguable that there is a valid contractual restraint, and that there has been a breach, or an apprehended breach, of such restraint. However, in the circumstances of this case, there is an anterior question about whether there is a prima facie case that Mr Schmidt's employment with Lamson was governed by the terms of a letter entitled 'Contract of Employment' from Lamson to Mr Schmidt dated 25 March 2024 (25 March letter).

Is there a prima facie case that Mr Schmidt's employment with Lamson was governed by the 25 March letter?

1. Mr Schmidt first started working for Lamson in or about 1990, and until his resignation in late 2024, he worked in various roles. These proceedings are concerned with a period of Mr Schmidt's employment with Lamson that ultimately led to his resignation.
2. According to Lamson's Managing Director, Kate Kershaw, in early February 2024 she offered Mr Schmidt a promotion to the role of Team Leader, which he accepted. In her affidavit of 7 April 2025, Ms Kershaw says that when she offered Mr Schmidt the promotion, she told him that he would receive a pay rise. She also told him that she would have a new contract drafted and sent to him.
3. Ms Kershaw says that she announced Mr Schmidt's promotion during a team meeting, and that his promotion was also made known within the Lamson organisation in an email and in the company newsletter.
4. Although Mr Schmidt received the 25 March letter, it was never signed. Lamson's case is that while Mr Schmidt did not sign the 25 March letter, he accepted Lamson's offer of employment by his conduct, including by accepting a pay rise and by performing work in accordance with the terms of that letter.
5. The relevant principles relating to the formation of contracts by conduct were summarised by Ward P in Forte Sydney Construction Pty Ltd v N Moit & Sons (NSW) Pty Ltd [2022] NSWCA 186 at [88]‑[97] (Meagher and Gleeson JJA agreeing). In that case, her Honour said at [89] that even if an offeror does not stipulate that silence will be taken as acceptance of the offer, acceptance does not have to be express. Accordingly, silence in conjunction with other circumstances may indicate acceptance of an offer.
6. Acceptance of an offer of employment may also be tacit or implied by conduct. In Carey v President of the Industrial Court Queensland [2004] QCA 62; [2004] 2 Qd R 359 (Carey) at [8], McPherson JA (Davies JA and Mackenzie J agreeing) said:

It is often convenient in deciding whether a contract has been formed to analyse the conduct of the parties into offer and acceptance; but it is never essential to do so where it is otherwise apparent that the parties have arrived at a binding agreement. See Brogden v Metropolitan Railway Co (1877) 2 App Cas 666. Formal acceptance of the offer contained in the second respondent's final letter of a further period of employment on the terms stated in it can readily be inferred from the conduct of the appellant in continuing to work for the second respondent after receiving it and from his receiving and accepting payment as he had done before. See Empirnall Holdings Pty Ltd v Machon Paull & Partners Pty Ltd (1988) 14 NSWLR 523, 527-528 (Kirby P); 534‑535 (McHugh JA). If the appellant had wished to escape the inevitable inference that he was assenting to work on the terms of the letters he received including the last, he was, of course, free to do so by stating his own terms to the second respondent in the form of a counter-offer.

(emphasis added)

1. See also Linwar Securities Pty Ltd v Christopher Savage [2006] NSWSC 786.
2. There is no dispute that after he received the 25 March letter, Mr Schmidt's weekly net pay increased from $1,931.42 to $2,006.65. Further, Ms Kershaw says that after Mr Schmidt was promoted to Team Leader, she saw him undertaking various duties over and above his existing duties as a Business Development Manager. Those duties included running the sales meeting, approving the team's leave applications, and handling petty cash. Ms Kershaw also says that she has been included on many email chains that demonstrate that he was performing his duties as Team Leader.
3. Mr Schmidt says that he agreed to give the position of Team Leader a 'trial'. He says that while he understood that the position of Team Leader was to involve additional responsibilities, in a practical sense, those additional responsibilities 'turned out to be basically nothing'. Further, he said that the increase in his pay was in an amount that he probably would not have noticed had it not been mentioned by Ms Kershaw. As will be seen, Mr Schmidt says that he expressly rejected the terms of Lamson's offer of employment set out in the 25 March letter. Nevertheless, Mr Schmidt does not deny that he did begin acting as a Team Leader at around the time he received the 25 March letter or that he knowingly took the benefit of a pay rise.
4. Mr Schmidt says that he received the 25 March letter as an attachment to an email from a Hayleigh Mottram on 27 March 2024. Ms Mottram is an employee of Circle HR, which provides outsourced human resource services to Lamson. Mr Schmidt says that when he received the 25 March letter, he read it straight away and immediately realised that there were many aspects of it that were not to his liking. Mr Schmidt says that he noted that the terms of the offer of employment were too restrictive and that they were not in his best interests. According to Mr Schmidt, the restraint of trade provisions in the 25 March letter concerned him the most. He says that he would never agree to be bound by a restraint of trade provision, and notes that he always needed to be able to join another company in the PTS field should that become necessary.
5. Mr Schmidt says that as soon as he received the 25 March letter, he called Ms Mottram and told her that he would not be signing the contract. He says that he asked Ms Mottram to look for his 'original contract' and to note the differences between that contract and the 25 March letter. Mr Schmidt says that Ms Mottram could not find the original contract and so she simply re-sent him the 25 March letter that he had already rejected.
6. According to Mr Schmidt, after he spoke to Ms Mottram, he heard nothing further about the 25 March letter until shortly before his resignation in late November 2024. Mr Schmidt says, in effect, that as he heard nothing further about the matter, he assumed that Lamson had abandoned the idea that he would sign a new contract of employment.
7. Before discussing the events of November and December 2024, it is necessary to say something about Ms Mottram's version of her interactions with Mr Schmidt, although it is not possible or appropriate for me to attempt to resolve the conflicts in the evidence, or issues relating to the credibility of witnesses.
8. In her affidavit dated 29 April 2025, Ms Mottram says that she has no recollection of ever speaking to Mr Schmidt. Ms Mottram says that she does remember emailing the 25 March letter to Mr Schmidt, but she does not believe that she ever discussed that letter with him over the telephone. She says that she was not authorised to provide human resources advice, and, in any event, she did not have the necessary skills to provide that sort of advice. She says that she was required to elevate all human resource concerns about contracts or work-related issues to Kathryn MacMillan, the Managing Director of Circle HR, or to another senior adviser, and that she does not remember escalating any issues about Mr Schmidt's employment.
9. Ms MacMillan supports Ms Mottram's evidence in that respect, as she says in her affidavit of 28 April 2025 that Ms Mottram had only recently graduated from university and was not authorised to provide human resources advice.
10. Ms MacMillan says that Ms Mottram sent the 25 March letter to Mr Schmidt by email on 27 March 2024 on two occasions. The first of those emails was sent to Mr Schmidt at 1.41 pm and the second at 1.55 pm. At the hearing of Lamson's application for an interlocutory injunction, counsel for Mr Schmidt somewhat faintly submitted that this sequence of events supported Mr Schmidt's evidence that he spoke to Ms Mottram immediately after he received the 25 March letter for the first time. However, it is difficult to accept that submission. The only difference between the two letters that are annexed to Ms MacMillan's affidavit is that there was a change to the identity of the person to whom Mr Schmidt was required to report. In any event, Ms Mottram's second email to Mr Schmidt at 1.55 pm, which is in the following terms:

Hi David,

My apologies. Please see attached an updated contract.

Please note the only change was the reporting manager title from managing Director to General Manager.

Thank you.

does not suggest that it was sent following a conversation in which Mr Schmidt made it clear that he would not be signing the letter.

1. It is also significant to note that Ms MacMillan has not found any file notes, emails or other forms of communication amongst Circle HR's business records that suggest that any telephone calls were received from or made to Mr Schmidt in 2024. According to Ms MacMillan, the only records that Circle HR has of written communications with Mr Schmidt about his contract of employment are:

(a) the emails from Ms Mottram to Mr Schmidt at 1.41 pm and 1.55 pm on 27 March 2024;

(b) an email from Ms MacMillan to Mr Schmidt at 11.43 am on 2 December 2024, with the subject 'Resignation CIRCLE HR';

(c) an email from Mr Schmidt to Ms MacMillan at 1.44 pm on 12 December 2024, with the subject 'RE: Resignation CIRCLE HR'; and

(d) an email from Ms MacMillan to Mr Schmidt at 1.44 pm on 13 December 2024, with the subject 'RE: Resignation CIRCLE HR'.

1. Ms Kershaw says that Mr Schmidt never told her that he rejected Lamson's offer of employment on the terms set out in the 25 March letter. There is also no evidence that Mr Schmidt raised any issues about the offer of employment with any other person at Lamson, including to the General Manager, Glenn Lucas, who Mr Schmidt reported to, or to Peter Kershaw, the other Lamson director. Ms Kershaw says that to the best of her knowledge, the first time Mr Schmidt indicated that he did not consider that he was bound by the 25 March letter was on 12 December 2024.
2. Lamson's case is that given that Ms Kershaw, Mr Kershaw and Mr Lucas were the people who were running Lamson's business, and having regard to Mr Schmidt's seniority and lengthy period of employment at Lamson, if Mr Schmidt was unhappy with the terms of the offer of employment, then he would have raised it with at least one of those people. However, he did not.
3. The relationship between Mr Schmidt and Lamson began to break down in early November 2024. It is unnecessary to describe in detail the circumstances that led to this breakdown. It is enough to note that Mr Schmidt was the subject of disciplinary action, which resulted in him being issued with a warning letter on 25 November 2024.
4. According to Mr Schmidt, he met with Ms MacMillan on 15 November 2024 when various allegations were put to him. In the same meeting, Ms MacMillan referred to the 25 March letter, which she referred to as 'the April contract'. Mr Schmidt says that when he pointed out that there was no signed agreement, Ms MacMillan informed him, to his surprise, that he was deemed to have accepted the terms of the 25 March letter because he had continued to work for Lamson. Mr Schmidt says, '[n]ot being a lawyer, I had never considered that such an argument could be made, especially once I had specifically called HR to tell them that I would not accept the contract'.
5. Mr Schmidt says that he made sure that the minutes of his meeting with Ms MacMillan reflected the fact that he had always rejected the contract. In those minutes, which are attached to Mr Schmidt's affidavit of 23 April 2025, there is a note which says, 'I have not signed that contract'. There is a further note which indicates that checks were going to be made to see if there had been email communication in relation to the contract.
6. Ms MacMillan says that she had a telephone conversation about the disciplinary meeting with Mr Schmidt on 19 November 2024. However, Ms MacMillan says that she does not recall that there was any discussion about Mr Schmidt's employment contract during that conversation.
7. In an email sent a few days later, on 22 November 2024, Ms MacMillan told Mr Schmidt that searches had been conducted back to 2022, and no emails in relation to the unsigned contract of employment had been located. Ms MacMillan also said, 'if you can tell me what aspects you are not happy about I can look into them for you. Best for you and the business to have a signed contract in place for the sake of clarity'.
8. A warning letter was sent to Mr Schmidt on 25 November 2024. That letter referred to the requirement that Mr Schmidt 'abide by the terms of [his] contract of employment'. However, when Mr Schmidt returned the warning letter to Lamson, he made a note on it that he did not currently have a signed employment contract. Mr Schmidt says that he did this because he did not want Lamson to think that he had accepted the contract of employment.
9. Mr Schmidt resigned on 26 November 2024.
10. On 2 December 2024, Ms MacMillan sent an email to Mr Schmidt in which she outlined what she, and Lamson, considered were Mr Schmidt's post-employment responsibilities under the 25 March letter. However, on 12 December 2024, Mr Schmidt responded in an email in which he said that he did not agree that he was bound by the terms of the unsigned 25 March letter. Mr Schmidt also said in that email that the last contract of employment he had signed was about 20 years ago, and noted that it did not impose the same restraints on him as the 25 March letter purported to impose.
11. Mr Schmidt's reference to a contract of employment that he signed '20 years ago' appears to have been a reference to a contract he signed with a company called 'Lamson (Macao) Limited' (Lamson (Macao)), for which he worked for a time while overseas. An unsigned contract of employment dated 6 August 2014 between Lamson (Macao) and Mr Schmidt is annexed to Ms Kershaw's affidavit of 7 April 2025. As Mr Schmidt said in his email to Ms MacMillan, that contract did not require him to comply with any relevant post-employment restraints.
12. In his affidavit of 23 April 2025, Mr Schmidt says, in effect, that apart from the contract with Lamson (Macao), he has never signed a written contract of employment with Lamson in the entire period of his employment. Mr Schmidt asserts that he would not have accepted employment with Lamson (Macao), or with Lamson, if he had been required to abide by a restraint of trade clause. He says that in the PTS industry there is a great deal of cross‑employment between relatively few companies and so a restraint of trade provision would render him unemployed for the duration of any restraint period. He says that this always has been, and remains, unacceptable to him.
13. In his 12 December 2024 email to Ms MacMillan, Mr Schmidt also asserted, '[m]y lack of acceptance of the contract has been noted by yourself on multiple occasions and therefore demonstrates that I never intended to be bound by the contract' and that Ms MacMillan 'cannot now argue that I am bound by the restraints because it now suits you to do so'. Although Mr Schmidt did not specify the 'multiple occasions' to which he had referred, it seems probable that he was referring to occasions in November 2024 when further mention was made of the 25 March letter after he had been sent the warning letter.
14. According to Ms Kershaw, Ms MacMillan responded to Mr Schmidt by email the following day, on 13 December 2024. However, the copy of the email attached to Ms Kershaw's affidavit is dated 6 April 2025. A copy of the same email is also attached to an affidavit signed by Ms MacMillan on 28 April 2025. Curiously, that copy is dated 13 December 2024. As no issue was taken with these anomalies, I will proceed on the basis that the email was sent to Mr Schmidt on 13 December 2024.
15. In her email to Mr Schmidt, Ms MacMillan said that there was no record of Mr Schmidt ever contacting Circle HR in relation to issues about his contract. Ms MacMillan asserted that as Mr Schmidt had not contacted Circle HR, and had continued to work for Lamson, it was her understanding that he would be taken to have accepted the terms of his employment as set out in the 25 March letter. Ms MacMillan then reminded Mr Schmidt of some of the post‑employment obligations provided for in the 25 March letter, and informed him, in effect, that if he failed to comply with any of those obligations, Lamson had a right to act against him.
16. There is no evidence that Mr Schmidt ever replied to Ms MacMillan's email. According to Ms Kershaw, it was not until early March 2025 that Lamson discovered that Air-Log Australia had submitted a competing tender for work at the QEII Hospital.
17. On a preliminary review of the available evidence, and without purporting to finally resolve the conflicts in the evidence, I am of the view that Lamson has a strong prima facie case that by his conduct, Mr Schmidt accepted an offer of employment on the terms of the 25 March letter. As I have said, based on Mr Schmidt's affidavit evidence, there is no real dispute that after he was offered the position of Team Leader, Mr Schmidt then began acting in that role. There is also no dispute that he accepted the promised increase in his wages. As in Carey, it can be inferred from this conduct that Mr Schmidt had accepted the terms upon which Lamson was offering to continue to employ him in that position as set out in the 25 March letter.
18. To the extent that Mr Schmidt suggests that he expressly rejected Lamson's offer of employment on the terms set out in the 25 March letter in a telephone call with Ms Mottram, that contention is at odds with the evidence of both Ms Mottram and Ms MacMillan. Significantly, it is also inconsistent with the contemporaneous records kept by Circle HR. Mr Schmidt's assertion that he rejected the offer of employment in March 2024 also does not sit at all well with the fact that he appears to have never expressed his opposition to that offer to any person who was in a position of management at Lamson until there was a breakdown in his relationship with his employer.
19. The fact that Mr Schmidt disputed that he was bound by the 25 March letter when disciplinary steps were taken by Lamson in November 2024 does not substantially affect my conclusion that Lamson has a strong prima facie case that by his conduct, Mr Schmidt accepted Lamson's offer of employment. On a preliminary assessment, there appears to be a good argument that Mr Schmidt had every reason to argue that he was not bound by the 25 March letter when his relationship with Lamson was breaking down.
20. Apart from his contention that he had expressly rejected Lamson's offer of employment on the terms set out in the 25 March letter, Mr Schmidt relies on several other arguments to submit that he was not bound by those terms.
21. Firstly, Mr Schmidt points to the fact that in all his employment history with Lamson he has only ever signed one written contract of employment, and that he has never agreed to be employed on terms that included any restraint of trade conditions. However, even accepting this as a premise, it does not follow that he did not, by his conduct, accept Lamson's offer of employment.
22. Secondly, Mr Schmidt suggests that Lamson had not committed itself to be bound by the terms of the 25 March letter. In that regard, Lamson did not ever insist that Mr Schmidt sign the 25 March letter, and Lamson itself never executed the letter. Further, Mr Schmidt relies on the fact that when Ms MacMillan responded to him on 22 November 2024, after he had returned the warning letter with notations indicating that he did not consider that he was bound by the terms of the 25 March letter, Ms MacMillan said, 'if you can tell me what aspects you are not happy about I can look into them for you. Best for you and the business to have a signed contract in place for the sake of clarity'.
23. In my view, none of these factors suggest that Lamson does not have a prima facie case that Mr Schmidt was bound by the terms of the 25 March letter. Based on the evidence before me, Lamson consistently conducted itself on the basis that the 25 March letter set out the terms of Mr Schmidt's employment. That conduct included promoting and publicly announcing the promotion of Mr Schmidt to Team Leader, increasing his pay commensurate with that role, and then seeking to deal with Mr Schmidt both during disciplinary action and then after his resignation in accordance with the provisions in the 25 March letter. The fact that the letter had not been formally executed by Lamson takes the matter no further.
24. Thirdly, Mr Schmidt submits that it is not possible for the existence of a contract of employment to be implied from his conduct because Ms Mottram sent him two versions of the 25 March letter within a short time of each other. Mr Schmidt asks, rhetorically, which of those versions of the letter can it be implied he accepted?
25. This argument is without merit. The two versions of the 25 March letter were sent just 14 minutes apart. Ms Mottram described the second version in her covering email as 'an updated contract'. The only difference between the two documents was that a change was made to the identity of Mr Schmidt's reporting manager from Managing Director to General Manager. In those circumstances, it is not reasonable to suggest that there may be some ambiguity about which contract it should be implied was accepted by Mr Schmidt. In any event, in circumstances in which the critical provisions upon which Lamson relies in support of its application for an injunction are identical in both versions of the 25 March letter, it makes little practical difference which version Mr Schmidt impliedly accepted.
26. At the hearing of the application for an interlocutory injunction, counsel for Mr Schmidt further submitted that the existence of a contract of employment in the terms of the 25 March letter cannot be implied because of the conditional nature of some of those terms. As I understood the argument, it was submitted that because Mr Schmidt had not complied with some of its conditional terms, his agreement to be bound by the 25 March letter could not be inferred from his conduct. The specific conditional terms that were referred to during oral submissions were terms that provided that the commencement of employment was conditional upon attendance at the workplace in New South Wales, demonstration of Australian citizenship or permanent residency or valid visa and being fully vaccinated against COVID-19. Counsel also referred to the fact that the schedule to the 25 March letter suggested that the appointment to Team Leader was for a probationary period of six months.
27. However, the question of whether Mr Schmidt's acceptance of the terms of the 25 March letter should be inferred from his conduct does not fall to be determined by asking whether he ever satisfied those conditions. As I have said, on a preliminary assessment of the evidence before me, there is a strong argument that Mr Schmidt accepted employment as Team Leader on all of the terms provided for in the 25 March letter, including any conditional terms, by working as Team Leader from about the end of March 2024 and by receiving an increase in his wages for carrying out those responsibilities. There is also evidence that he did not raise any objections to the 25 March letter with Lamson's senior management, as might be expected if he did not consider that he was bound by its terms, and his evidence that he raised objections with Circle HR appears to have significant difficulties.
28. Counsel argued, in the alternative, that even if Mr Schmidt had impliedly accepted the terms of the 25 March letter, the restraint provisions in that letter never came into effect because the conditional terms referred to in that letter were never satisfied. However, the conditional terms upon which Mr Schmidt relies were clearly for Lamson's benefit. In the circumstances, there is a strong argument that Lamson waived each of those conditions by promoting Mr Schmidt to Team Leader, by increasing his wages to reflect that promotion, and by never requiring him to comply with the conditions during the more than eight months he was performing his functions in that role.
29. I also note that to the extent that the 25 March letter suggested that the appointment was for a probationary period, cl 9.1 expressly provided that an initial probationary period may apply if an employee was a 'new employee', which Mr Schmidt most certainly was not. Further, while the schedule to the 25 March letter suggested that the position of Team Leader was to be located in New South Wales, cl 8.2 and cl 8.3 provided, in effect, that Lamson could direct an employee bound by its terms to work at any different location.
30. Counsel for Mr Schmidt raised a further contention at the hearing of Lamson's application, albeit only faintly. Counsel appeared to suggest that the question of whether there was a prima facie case that Mr Schmidt was bound by the terms of the 25 March letter was in some way informed by the fact that he only received a $70 pay rise as consideration for the post‑employment restraint of trade obligations. In that respect, it appeared to be contended that the 25 March letter was not binding because of the absence of any valuable consideration.
31. However, as Pembroke J observed in Charltons CJC Pty Ltd v Fitzgerald [2013] NSWSC 350 at [26]:

[A]s a matter of legal analysis, whenever parties agree to discharge an existing contract and replace it, their mutual promises to discharge the original agreement and abide by the new agreement will constitute sufficient consideration - unless their conduct is simply an artifice. The point was stated succinctly in Figjam Pty Ltd v Pedrini [2005] NSWSC 221 at [15]:

[I]f the existing duty is discharged by a contract which includes a promise with the same content as the original promise, the promise will be regarded as binding because consideration is present in the parties' agreement that the original duty is to be discharged ... Unless the circumstances are such that it is impossible to interpret the second contract as a termination of the first, a court will discern an implied agreement to terminate the original contract and consideration will be present.

1. For these reasons, I am of the view that Lamson has established that there is a prima facie case that Mr Schmidt's employment with Lamson was governed by the 25 March letter.

Is there a prima facie case that the post-employment obligations in cl 29 of the 25 March letter are valid and enforceable?

1. The principles that are to be applied in determining the enforceability of restraint of trade provisions in employment contracts are well settled. Those principles were summarised in Just Group Ltd v Peck [2016] VSCA 334 at [30]‑[36]:

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

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

(a) reasonable as between the parties; and

(b) not unreasonable in the public interest.

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

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

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

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

(i) duration; or

(ii) extent.

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

(a) confidential information and trade secrets; and

(b) the employer's customer connections.

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

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

(footnotes omitted)

1. This summary of the relevant principles has been applied by judges of this Court on numerous occasions, most recently by Snaden J in Blue Rock Australia Pty Ltd v Kaushik [2025] FCA 176 at [27].
2. In relation to the legitimate interest in protecting 'customer connections', the Full Court in Pearson v HRX Holdings Pty Ltd [2012] FCAFC 111; (2012) 205 FCR 187 (Pearson) at [47] reproduced a lengthy passage from a judgment of the Supreme Court of Canada in Elsley v J.G. Collins Insurance Agencies Limited [1978] 2 SCR 916 at 925‑928, to explain why an employer's customer connection is a legitimate business interest that can support a reasonable restraint of trade. It is only necessary to reproduce part of that passage:

There are cases which uphold the validity of a covenant prohibiting an employee from engaging in a particular type of work within a specified area, and for an acceptable period of time after the termination of his employment: see e.g. Fitch v. Dewes [1921] 2 AC 158; Marion White v. Francis [1972] 1 WLR 1423; P.C.O. Services Ltd. v. Rumleski [1963] 2 OR 62; Campbell, Imrie and Shankland v. Park [1954] 2 DLR 170. In each of these cases the employee was in a position where he acquired a close personal acquaintance with the clients or customers of the business. Such a restrictive covenant was reasonable, in the words of Lord Birkenhead in Fitch v. Dewes [1921] 2 AC 158 at p. 165, in order that the employee 'should not be in a position to use the intimacies and knowledge which he had acquired in the course of his employment in order to create a practice of his own in that same place and by doing so undermine the business and the connection of the [employer].' In the present case, when the clause was drafted it was known that [the employee] had, or would acquire, a special and intimate knowledge of the customers of his prospective employer and the means of influence over them.

1. The Full Court in Pearson also reproduced Brereton J's explanation of an employer's legitimate interest in the protection of its customer connections in Cactus Imaging Pty Ltd v Peters [2006] NSWSC 717; (2006) 71 NSWLR 9 at [25]:

It is plain that an employer's customer connection is an interest which can support a reasonable restraint of trade. Such a restraint is legitimate if the employee has become, vis-à-vis the client, the 'human face' of the business, namely the person who represents the business to the customer - or, as it was put by Hoover J in Arthur Murray Dance Studios of Cleveland Inc v Witter (1952) 105 NE (2d) 685 at 706 (Ohio): 'The personal relation between the employee and the customer [is] such as to enable the employee to control the customer's business.' While the employer is not entitled to be protected against mere competition by a former employee, the employer is entitled to be protected against unfair competition based on the use by the employee after termination of employment of the customer connection which the employee has built up during the employment - which, because the employee has in effect represented the employer from the customer's perspective during the employment, might at least temporarily appear attached to the employee, but in truth belongs to the employer.

(citations omitted)

1. In support of its application for an interlocutory injunction, Lamson relied on a comprehensive restraint of trade provision that appears in the 25 March letter, which is in the following relevant terms:

29. Post-employment obligations

29.1 You acknowledge and agree that:

(a) in the course of your employment, you will:

(i) have access to and knowledge of Lamson's Products, Services, skills and techniques;

(ii) become acquainted with the Clients and Suppliers of Lamson and their special needs and requirements;

(iii) become aware of the identity of prospective Clients whose business Lamson is attempting to attract;

(iv) generally be privy to Confidential Information and Intellectual Property concerning Lamson, its Clients, Suppliers, and its methods of doing business.

(b) the only effective, fair and reasonable manner in which the interests of Lamson can be protected is by the restraints imposed upon you in this Contract;

(c) the duration, extent and application of the restrictions contained in this Contract are not greater than is reasonably necessary to protect Lamson's legitimate business interests, including the preservation of its relationships with its Clients, Suppliers, employees, agents, directors, officers, partners, contractors, advisors and consultants, the goodwill of its business, its Confidential Information and Intellectual Property; and

(d) the level of your benefits, including remuneration and bonuses (if any) constitutes adequate consideration for the restraint obligations imposed under this Contract.

29.2 You agree that having regard to the circumstances set out in clause 29.1 you will not, directly or indirectly, either as a principal, employee, agent, director, officer, partner, consultant, contractor, advisor or otherwise, for your own benefit or the benefit of any other Person, directly or indirectly, engage in any of the Activities specified in clause 29.3, within the Restraint Area specified in clause 29.4, for Restraint Period specified in clause 29.5, without the prior written consent of Lamson.

29.3 The Activities are:

(a) ...

(b) engage in or perform any work in competition with the part of the business of Lamson in which you worked during the 12 months preceding the Termination Date;

(c) canvass, solicit, or entice away (or attempt to do any of the foregoing), the business or custom of any Client ... with whom you or a Person reporting to you, has performed work or had dealings with during the 12 months preceding the Termination Date;

(d) induce or encourage any Client (or attempt to do any of the foregoing), with whom you ... have performed work or had dealings with, during the 12 months preceding the Termination Date, to terminate or to not renew or maintain or alter, any business relationship, contract or arrangement, that Client has with Lamson ...;

29.4 The Restraint Area means:

(a) New South Wales, Victoria, Queensland, South Australia and Western Australia;

29.5 The Restraint Period means:

(a) the twelve (12) month period which commences on the day immediately following the Termination Date

1. The 25 March letter also contains provisions that contain less onerous alternatives to the restraints, which apply on a cascading basis if any of the more onerous restraints are ultimately found by a court to be void, invalid or otherwise unenforceable. It is unnecessary to reproduce those provisions.
2. Although Lamson's written submissions suggest that it sought an injunction that covered the full gamut of the restraints provided for in cl 29, the terms of the proposed interlocutory injunction reflect only certain aspects of the restraints referred to in cl 29.3(b), (c) and (d). That this was the intended reach of the injunction sought was confirmed at the hearing by counsel who appeared on behalf of Lamson.
3. There are some definitions in the 25 March letter. Most relevantly, the phrase 'Client of Lamson' (emphasis in original) is defined to include any person who, on the last day of the employee's employment with Lamson ('Termination Date'):

(a) is or was a person to whom Lamson provides and/or provided products or services at any time during the 12 months prior to the Termination Date; or

(b) has entered into discussions or negotiations with Lamson at either the person's own initiative or at the initiative of Lamson at any time during the 12 months prior to the Termination Date with a view to receiving products or services provided by Lamson and who had not notified Lamson at least three months prior to the Termination Date that they did not wish to receive such products or services (other than any act you have performed, indirectly or directly, in breach of the terms of this Contract, to induce a person to not receive such products or services).

1. This definition is also reflected in the terms of the orders sought by Lamson.
2. In my view, there is a serious question to be tried that the restraints in cl 29.3(b), (c) and (d) were imposed to protect Lamson's legitimate interests in both its customer connections and its confidential information.
3. At the time he was provided with the 25 March letter, Mr Schmidt was already a senior and very long-term employee of Lamson, having commenced his employment with that company in or about 1990. From about July 2019, Mr Schmidt became a Business Development Manager for Lamson, until he was promoted to the position of Team Leader in the circumstances that I have discussed earlier in these reasons.
4. In his affidavit of 7 April 2025, Mr Kershaw says, at paras 31-32, that as a Business Development Manager based in Queensland, Mr Schmidt was involved in sales on a national scale. Mr Kershaw says that Mr Schmidt worked on several projects for a range of clients, and that he was frequently the key contact for many of Lamson's key suppliers and clients nationally.
5. In her affidavit of 16 April 2025, Ms Kershaw says at para 28 that Lamson's business development teams obtain, hold and directly manage all of Lamson's customer relationships in their designated regions. Further, at para 50 of that affidavit, Ms Kershaw states that:

Mr Schmidt was the key contact for Lamson Concepts' clients in Queensland, Western Australia and the Northern Territory. He was responsible for building all of Lamson Concepts' relationships in those regions. I often saw him on the phone in the office with customers, answering queries and offering advice on the design of the Company's systems.

1. Ms Kershaw goes on to say, at para 51 of her affidavit, that Mr Schmidt's key duties as Business Development Manager included:

(a) generating and providing quotes for prospective clients;

(b) generating further revenue by encouraging current clients to renew contracts, upgrade and maintain their existing systems;

(c) client relationship management, including site visits;

(d) end-to-end management of tenders; and

(e) administrative work and inputting data into [customer relationship management] system and [enterprise resource planning] system.

1. In my view, this evidence makes it very clear that there is a prima facie case that Mr Schmidt had built up significant customer connections with Lamson's clients, and that he had done so over a considerable period, by the time he was provided with the 25 March letter. The evidence also demonstrates that the establishment of customer connections was not merely an incidental part of Mr Schmidt's role. Instead, Mr Schmidt's key duties required him to maintain and build Lamson's clientele. In that regard, the following observations that were made by Brereton J in Koops Martin Financial Services Pty Ltd v Reeves [2006] NSWSC 449 at [44] are pertinent:

A more robust view is taken where the employee's role includes obtaining and extending custom for the employer's business. When an employee's duty includes to build up the employer's clientele as well as to deal with existing clients, a wide restraint is more likely to be upheld, because in such circumstances the employer is entitled to protection against the employee taking advantage of the period of service to prepare for later competition. In such a case, the establishment of a customer connection is not merely incidental to the employment, but its purpose. In that context, a covenant is considered reasonable, first, to remove the temptation that by cultivation of the target market during employment, the employee may prepare the ground for its exploitation by himself after the employment ends, rather than for his employer during the employment; and, secondly, to prevent exploitation after termination of the employment by the employee of a connection with the customer which the employer has paid the employee to establish for the employer's benefit.

(citations omitted; emphasis added)

1. There is also substantial evidence relied on by Lamson that demonstrates, at least on a preliminary assessment, that as a long-standing employee, and certainly when he was a Business Development Manager, Mr Schmidt had access to confidential information belonging to Lamson, including the formulas used by Lamson to determine its pricing, information relating to its costs and margins, information relating to Lamson's tender development and specifications, and information concerning Lamson's clients. In that regard, it is of some significance to note that at a previous hearing of this matter on 13 May 2025, Mr Schmidt's counsel accepted, in effect, that Mr Schmidt had obtained knowledge of Lamson's confidential information. As counsel put it (at ts 35):

we're probably not even going to dispute that Mr Schmidt knew at some point in time quite a bit of confidential information because he was clearly a smart man and he learned a lot of things. You can't force him to unlearn something. The relevant question is did he ever use any such confidential information.

1. Mr Schmidt argued that the duration and geographic extent of the restraints in cl 29.3(b), (c) and (d) of the 25 March letter went beyond what was reasonably necessary to protect Lamson's legitimate interests in its customer connections and its confidential information, but did not otherwise contend that those restraints were unreasonable on any other basis.
2. In seeking an interlocutory injunction, Lamson relied on the greatest period of restraint that is provided for in cl 29.5(a) of the 25 March letter, being a period of 12 months commencing on the day following the 'Termination Date'. Lamson also sought orders restraining Mr Schmidt from engaging in the conduct referred to in cl 29.3(b), (c) and (d) in New South Wales, Victoria, Queensland, South Australia and Western Australia. Accordingly, the relevant question is whether the restraints do no more than is reasonably necessary by applying for a period of 12 months in those five States. In my view, Lamson has demonstrated that there is a serious question to be tried that the restraints do no more than is reasonably necessary in that context.
3. In Informax International Pty Ltd v Clarius Group Limited [2012] FCAFC 165; (2012) 207 FCR 298 at [94] the Full Court noted that some courts have held that the test for reasonableness in relation to the duration of restraint of trade provisions depends on the length of time it would take a reasonably competent replacement employee to show his or her effectiveness and establish a rapport with customers. The Full Court also observed that another test has been preferred which focuses on the time that it would take to sever the relationships built up between the former employee and the clients for whom work was performed. Ultimately, the Full Court agreed with the approach taken by Allsop P (Hodgson JA and Handley AJA agreeing) in Hanna v OAMPS Insurance Brokers Ltd [2010] NSWCA 267 (Hanna) at [43]‑[44]. In Hanna, Allsop P said that use of one test or another depended upon what was required, in the circumstances, to protect the connection of the former employer, and noted that there is a balance to be struck between reasonable protection to which the former employer was entitled and the right of the former employee to practice a trade or profession.
4. In her affidavit of 14 April 2025, Ms Kershaw says that a new Business Development Manager has been employed to replace Mr Schmidt, and that he or she was due to commence employment on 14 April 2025. Ms Kershaw also says that the new Business Development Manager will be required to become technically proficient in several areas of Lamson's business and that, while Mr Schmidt's replacement comes from a sales background, it will take him or her at least two years to acquire the specialist knowledge required to fulfill that role. Ms Kershaw also opines that it will take up to 10 years for a new Business Development Manager to operate at a similar level as Mr Schmidt was operating at before his resignation. However, Ms Kershaw does not explain the basis of those opinions.
5. On the other hand, Mr Schmidt says in his affidavit of 23 April 2025 at para 181 that a proficient Business Development Manager will learn enough information about the basics of the PTS with a few weeks of training. He also says that the job would not be difficult to master within two or three months at the most. In his second affidavit of 9 May 2025, Mr Schmidt says that it would not take six months to train a Business Development Manager. He also suggests that there may be other people employed by competitors that could be employed, and that there are people working within Lamson who could do his former job. Mr Schmidt also says that Lamson has few customers, who could all be visited within two weeks.
6. In addition to his own evidence, Mr Schmidt relies on an affidavit of 9 May 2025, signed by a Javid Khan, another former Lamson employee. Mr Khan was employed by Lamson for about 30 years, during which time he was a Branch Manager and Sales Manager, and an International Export Manager. According to Mr Khan, a new Business Development Manager does not need deep technical expertise. He says that a capable person from outside the industry could be effective within six months, while someone with industry experience could be 'fully up to speed and credible' in as little as two months.
7. It is clearly not possible or appropriate for me to resolve this conflict in the evidence. As Jackson J observed in Ord Minnett Holdings Pty Ltd v Longmuir [2023] FCA 1262 at [89]:

[O]n an interlocutory injunction application, the Court will not conduct a preliminary trial of the action in order to resolve conflicts in the parties' evidence. Therefore the use to which a respondent's evidence can be put may be a limited one. The evidence may be such as to explain away the case put by the applicant, or it may show that in reality there is no such case. But it will not be enough merely to raise a conflict of evidence.

(citations omitted)

1. However, it must also be borne firmly in mind that the practical effect of the interlocutory injunction sought by Lamson may be to finally decide the matter, having regard to the relatively short period that now remains of the restraints Lamson seeks to enforce.
2. In my view, the evidence relied on by Mr Schmidt does not explain away Lamson's case or show that Lamson does not in fact have a case. In any event, that evidence only really deals with the time that it might take a new Business Development Manager to come to grips with the role. It does not directly deal with the time it would take a new Business Development Manager to establish a rapport with Lamson's customers or the time it would take for Mr Schmidt's relationships with those customers to be severed.
3. Bearing in mind that the reasonableness of a restraint of trade clause is to be assessed as at the date of the relevant contract, I am of the view that there is a serious question to be tried about whether a duration of 12 months for the restraints in cl 29.3(b), (c) and (d) is reasonably necessary to protect Lamson's legitimate interests in its client connections and confidential information.
4. The reasonableness of the 12-month restraint period, as at 25 March 2024, may also be inferred from Ms Kershaw's evidence about the time it will take to replace Mr Schmidt in 2025, given the relatively short period of time that has elapsed since the 25 March letter. The reasonableness of that period is also supported by the fact that it is strongly arguable that by 25 March 2024, Mr Schmidt had well and truly become one of the human faces of Lamson's business, at least insofar as Queensland, Western Australia and the Northern Territory is concerned. In that regard, since at least mid-2019, Mr Schmidt's key responsibilities have focused on sales and client services, including generating and providing quotes for prospective clients, encouraging current clients to renew contracts or to upgrade and maintain their existing systems, and managing client relationships. Mr Schmidt has also been described as the 'key contact' for Lamson's clients in Queensland, Western Australia and the Northern Territory, who was responsible for building all of Lamson's relationships in those regions.
5. In relation to the geographical restraints, Mr Schmidt submits that those restraints are unreasonable because he was only a Business Development Manager in Queensland, Western Australia and the Northern Territory, and that other Lamson employees were responsible for Victoria, South Australia, New South Wales and Tasmania. It appeared to be suggested, in this respect, that it was unreasonable as of 25 March 2024 to have imposed geographical restraints in relation to those other States because Mr Schmidt did not have any customer connections in those places.
6. It is no doubt true that the relevant customer connections that specifically relate to Mr Schmidt are likely to be concentrated in Queensland, Western Australia and the Northern Territory, being the areas for which he was responsible as a Business Development Manager. In those circumstances, it might be argued that it would be unreasonable to protect Lamson's customer connections established in those areas by also restraining competitive behaviour in other States. However, it must be remembered that I have concluded that Lamson has a prima facie case that the restraints in cl 29.3(b), (c) and (d) were imposed to protect Lamson's legitimate interests in both its customer connections and its confidential information. Given the ease by which Mr Schmidt might, as at 25 March 2024, deploy confidential information in any State or Territory, regardless of any customer connections, it is strongly arguable that the geographical reach of the restraints in cl 29.4 is not unreasonable. In that regard, I note that the restraints do not prohibit Mr Schmidt from engaging in competitive conduct in the Northern Territory, the Australian Capital Territory, or in Tasmania.
7. It is also necessary to briefly consider whether the restraints in cl 29.3(b), (c) and (d) are reasonable in the public interest: Amoco Australia Pty Ltd v Rocca Bros Motor Engineering Co Pty Ltd [1973] HCA 40; (1973) 133 CLR 288 at 306‑307 (Walsh J).
8. In The Contract of Employment, it is noted that the requirement of reasonableness in the public interest is rarely an impediment to the enforcement of a restraint of trade provision: Irving M, The Contract of Employment (2nd ed, LexisNexis Butterworths, 2019) at [19.8]. This is because the main public interest factors are weighed in assessing whether the restraint is reasonable by reference to the interests of the parties.
9. In this case, Mr Schmidt submitted that competition in the building of public hospitals is 'very much in the public interest' because it 'keeps public expenditure low'. He also submitted that it was not in the public interest to have Mr Schmidt unemployed and dependant on 'the public purse'. Both of those propositions may be shortly disposed with. There is no evidence that the restraints in cl 29.3(b), (c) and (d), which are alleged to be imposed on Mr Schmidt, will dissuade or otherwise affect competition in relation to the construction of public hospitals generally, or that it will in some way undermine a desire to minimise the extent of public expenditure. Further, Lamson has indicated that if the orders it seeks are made, it would be prepared to undertake to pay Mr Schmidt, on a pro rata basis, the sum of $10,000 each calendar month until 13 December 2025.
10. It is now necessary to consider the question of whether there is a prima facie case of breach or of apprehended breach of cl 29.3(b), (c) and/or (d).

Is there a prima facie case that there has been a breach and/or that there is an apprehended breach of cl 29.3(b), (c) and/or (d)?

1. At the hearing of Lamson's application for an interlocutory injunction, counsel for Mr Schmidt in effect accepted that if there was a prima facie case that cl 29 of the 25 March letter was enforceable, there was at least a prima facie case that Mr Schmidt had breached cl 29.3(b): ts 43. That concession was properly made.
2. In his affidavit of 23 April 2025 at paras 142-143, Mr Schmidt explains how he and Mr Oscuro came to incorporate Air-Log Australia shortly after they both resigned from Lamson:

I spoke with [Mr Oscuro] and mentioned to him that Air-Log [presumably Air-Log International] was looking for a partner in Australia as they could see very little future business with Lamson as they have an exclusive contract with Swisslog. That together we could start our own company in partnership with Air-Log and maybe pick up enough work to pay the bills[.] We would only take on new project works, new builds that didn't require works that need to connect to any existing systems, it would be standalone systems only. We would not look at doing maintenance works due to the demand on staff it would take to offer 24hr service. There may be an option in the coming years to offer this service.

[Mr Oscuro] agreed and so we started the process of registering the company name and setting up the company structure, which was done by 11 February 2025.

1. Mr Schmidt goes on to say that Air-Log Australia intends to supply Air-Log International PTSs into Australia. According to Ms Kershaw, Air‑Log International is one of Lamson's key suppliers of the PTSs that it uses to upgrade and maintain existing Air‑Log systems in the health care sector.
2. Mr Schmidt says that Air-Log International will supply all pricing and technical documents for all their equipment, and that his company, Air-Log Australia, only intends tendering new project builds or standalone systems within the health care and industrial industries, and only those projects looking for a PTS. However, in the context of explaining the markets in which Air-Log Australia intends operating, Mr Schmidt candidly accepts that 'these are the only fields where we would be seen as a competitor to Lamson': Mr Schmidt's affidavit of 23 April 2025, para 148 (emphasis added).
3. Mr Schmidt made a further admission about the fact that Air-Log Australia is in competition with Lamson at para 207 of his affidavit of 23 April 2025:

I am personally aware of at least 30 different projects that Lamson is currently tendering for. This is not because I obtained some confidential information; it is simply what I know from my time with them. We, as Air-Log Australia, have our own business to attend to, and while it may occasionally overlap with Lamson, it is important to understand the figures. Of the 30 Lamson projects that I am aware of, we have competed with them and won in one project (being QEII) and are currently competing with them for one other project (being the Ipswich tender). That is the totality of our competition.

(emphasis added)

1. Mr Schmidt also confirmed that Air-Log Australia was in competition with Lamson in his affidavit of 9 May 2025. At para 20 of that affidavit, Mr Schmidt says that '[i]t is important to note that the only area of competition between us and Lamson is for hospital new builds'. At paras 24‑25 of that affidavit, he says:

Competition in any sector that builds hospitals for the public is in the common interest. It is in the interest of QLD taxpayers that their hospitals are built cost effectively. Air‑Log [International] is generally cheaper than Swisslog, and of comparable quality. To lock them out of competing against Swisslog's local distributor, the applicant, will result in higher prices for society.

Lamson's customers in the health care sector of newly built hospitals, which are the only sector in which Lamson and we compete, are few by definition.

1. However, and somewhat curiously, Mr Schmidt then says the following at para 26 of his 9 May 2025 affidavit:

I also repeat my earlier comments in my [affidavit of 23 April 2025] regarding the relationship between Swiss[log] and Air-Log [Australia]. We at Air-Log Australia do not compete with Lamson for new builds as they offer one product, and we another completely different product. We do not use the same product at a cheaper price, they cannot offer our product, no matter what the price. It is up to the customer to decide which one he prefers.

1. While Lamson and Air-Log Australia may not offer the same product, it does not follow that they are not in competition with each other. Indeed, as Mr Schmidt said at para 39 of his 9 May 2025 affidavit, 'I also repeat that I did not use any of Lamson's confidential information for either of the QEII or the Ipswich tender, the only tenders where we compete with Lamson' (emphasis added).
2. On the assumption that the 25 March letter is valid and enforceable against Mr Schmidt, it can be seen from the terms of cl 29.2 that Mr Schmidt relevantly agreed that he would not directly or indirectly, either as a principal or as a director, for his own benefit or for the benefit of another person, engage in any of the activities in cl 29.3. One of those activities, expressed in cl 29.3(b), was engaging in or performing any work in competition with the part of the business of Lamson in which he worked during the 12 months before the 'Termination Date'.
3. There is no doubt that during the 12 months before his final day of employment with Lamson, Mr Schmidt was working in the part of Lamson's business that tendered for what Mr Schmidt has referred to as 'the QEII project'. In that regard, para 43 of Mr Schmidt's affidavit of 9 May 2025 makes it abundantly clear that Mr Schmidt was intimately involved in Lamson's tender for the QEII project from at least March 2024, and then right up until just before he resigned in November 2024:

1. Given Mr Schmidt's further evidence that Air-Log Australia was successful in securing the tender for the QEII project, and that it received the purchase order to carry out the work on 3 April 2025, there is a serious question to be tried as to whether Mr Schmidt has thereby breached cl 29.3(b) of the 25 March letter.
2. In addition, there does not appear to be any real question that during the 12 months before his final day of employment with Lamson, Mr Schmidt had been engaged in the part of Lamson's business that was involved in tendering for the 'Ipswich project'. At para [redacted] of his affidavit of 9 May 2025, Mr Schmidt says:

1. In those circumstances, there is also a serious question to be tried as to whether such conduct gives rise to an apprehended breach by Mr Schmidt of cl 29.3(b).
2. Turning then to cl 29.3(c) and (d) of the 25 March letter. There is no evidence that Mr Schmidt has breached either of those clauses. In that regard, there is no evidence that Mr Schmidt has canvassed, solicited or enticed away any of the business or customers or any of Lamson's relevant clients, or attempted to do so (cl 29.3(c)). In that regard, there is no evidence that Mr Schmidt has canvassed, solicited or enticed away any of the business or customers or any of Lamson's relevant clients, or that he has attempted to do so (cl 29.3(c)). There is also no evidence that he has induced or encouraged any relevant client to terminate or to not renew or maintain or alter any business relationship, contract or arrangement a client has with Lamson, or that he has attempted to do so (cl 29.3(d)). However, there are at least three reasons why I am of the view that there is sufficient apprehension of breach of both of those clauses to justify that aspect of the injunctive relief sought.
3. Firstly, my conclusion that there is a prima facie case that Mr Schmidt has breached cl 29.3(b) gives rise in my mind to sufficient apprehension about a future breach of both cl 29.3(c) and (d), to justify an injunction in respect of the conduct restrained by those clauses: Reeves v Koops Martin Financial Services Pty Ltd [2006] NSWCA 221 at [20]; and John Fairfax at [44].
4. Secondly, there is sufficient apprehension of a breach of cl 29.3(c) and (d) having regard to the evidence that Mr Oscuro downloaded Lamson's confidential information shortly before he resigned. Given that Mr Oscuro then set up in business with Mr Schmidt in competition with Lamson, there is a palpable risk that both Mr Oscuro and Mr Schmidt intend using that information to advance Air-Log Australia's business, to the detriment of Lamson, including by engaging in the type of conduct that is the subject of the restraints in cl 29.3(c) and (d).
5. Thirdly, there is sufficient apprehension of breach of the restraints in cl 29.3(c) and (d) because of the very nature of the new business Mr Schmidt has commenced with Mr Oscuro, in Air‑Log Australia. In that respect, while Mr Schmidt says, at para 148 of his affidavit of 23 April 2025, that Air-Log Australia only intends competing with Lamson in connection with 'new project build[s] or standalone systems within the healthcare and industrial industries and only those projects looking for pneumatic tube systems', he also says at paras [redacted] of that affidavit that:

1. Further, at para [redacted] of that affidavit, Mr Schmidt says:

1. Mr Schmidt contends that the balance of convenience is very clearly in his favour. He submits that an injunction in the terms sought by Lamson will have a significantly negative impact on him. He says that he has no formal qualifications that would allow him to start again in another industry, that his only marketability lies within the PTS industry and that if the injunction were granted, he would be unemployed for the rest of the year.
2. Mr Schmidt says that he has three dependants and that he is, in effect, the sole breadwinner in his family. He expects that he will be unable to meet his financial commitments if an interlocutory injunction were to be granted. He also says that an injunction will mean that Air‑Log Australia will not be able to undertake the QEII Hospital project for which it successfully tendered and that it is likely that Air-Log Australia will become insolvent.
3. It is also argued on behalf of Mr Schmidt that damages are a sufficient remedy, that Lamson has unreasonably delayed in commencing these proceedings, that it has failed to move with reasonable urgency to employ a replacement for Mr Schmidt after he resigned, and that there is no evidence that Lamson will suffer any loss if an injunction is not granted.
4. I do not accept that the balance of convenience is in Mr Schmidt's favour. In fact, I am of the view that the balance of convenience and the risk of injustice is strongly in favour of the interlocutory injunctive relief sought by Lamson.
5. Where, as here, an applicant moves to enforce a lawful negative stipulation in a contract, the balance of convenience will usually favour the applicant. It is also the case that damages are rarely a sufficient remedy in the context of restraints of trade. This is because in most cases, as in this case, it would be very difficult to prove and quantify the damage that may be suffered, which may accrue over time: John Fairfax at [45].
6. There is no reason to conclude that Lamson has unreasonably delayed in commencing these proceedings. According to Ms Kershaw's affidavit of 7 April 2025, Lamson did not discover that Mr Schmidt and Mr Oscuro may have set up a business in competition with it until early March 2025. Lamson then immediately arranged for a forensic review to be conducted of the electronic devices that had been returned to it by Mr Schmidt and Mr Oscuro after their respective resignations.
7. There is also no evidence to suggest that there was any unreasonable delay in obtaining a report of the forensic review at the end of March 2025. Further, it could not sensibly be suggested that there was then an unreasonable delay in commencing these proceedings on 14 April 2025.
8. In relation to Mr Schmidt's argument that Lamson has unreasonably delayed in employing his replacement, I note that he resigned on 26 November 2024 and left his employment with Lamson on 13 December 2024. It is reasonable to conclude that the prospects of securing a replacement for Mr Schmidt in the short term would have been difficult to achieve at that time of the year. According to Ms Kershaw, a replacement for Mr Schmidt was due to commence employment on 14 April 2025. In all the circumstances, I do not regard the period of approximately four months it took Lamson to replace Mr Schmidt as amounting to an unreasonable delay.
9. In my view, there is a strong argument that Lamson remains exposed to the risk that Mr Schmidt may use its client connections and the confidential information he obtained during his employment to Lamson's detriment. Further, the evidence that Mr Oscuro downloaded some of Lamson's confidential information shortly before he resigned, and without any authority to do so, is a factor that weighs very much in favour of making the orders sought by Lamson. That evidence supports a conclusion that Lamson has an existing and ongoing protectable interest in its client connections and confidential information. It may also be inferred that absent the injunctive restraints sought by Lamson, Mr Oscuro and Mr Schmidt intend using Lamson's confidential information and client connections to advance the business they set up together and, concurrently, to cause actual damage to Lamson's business. In that regard, it is not in dispute that Air-Log Australia has already successfully tendered in competition with Lamson for work on the QE II Hospital and has also submitted a tender in competition with Lamson in connection with the Ipswich Hospital.
10. As I have already found, there is a serious question to be tried about whether Mr Schmidt is bound by valid and enforceable restraints imposed on him by cl 29.3(b), (c) and (d) of the 25 March letter. Based on my preliminary assessment of the evidence, Lamson's case in that regard appears to be strong. However, an injunction may have a negative effect on Mr Schmidt's ability to meet his various financial commitments. Having regard to his age and his lengthy work history in only one industry, he is likely to find it difficult to secure employment in anything other than the PTS industry.
11. The restraints sought in the injunction may also impact on Air-Log Australia's capacity to carry out its business during the period of those restraints, including in connection with its successful tender for work on the QEII Hospital project. In that respect, Mr Schmidt says in his affidavit of 9 May 2025 that Air-Log Australia is required to provide bank guarantees for the QEII Hospital project to meet certain contractual obligations, and that it must also urgently order materials. Mr Schmidt says that if he cannot work, there is a risk that those requirements will not be met, and that Air-Log Australia will lose the QEII Hospital project and may incur penalties. However, it is not possible for me to accurately measure the actual extent of that impact based on the untested evidence. Further, there is little or no evidence to suggest that Air-Log Australia will be unable to pick up and carry on its business in competition with Lamson at the end of the period of the restraint sought.
12. Notwithstanding the negative impacts that may potentially be visited on Mr Schmidt and Air‑Log Australia if the interlocutory injunction sought by Lamson is made, it must be understood that when Mr Schmidt commenced operating Air-Log Australia in direct competition with Lamson, he must have been aware that Lamson believed that it was entitled to the benefit of the restraints in cl 29 of the 25 March letter. This is apparent from the email Ms MacMillan sent to Mr Schmidt on 2 December 2024, in which she made it clear that although Mr Schmidt had not signed the 25 March letter, Lamson considered that he was bound by its terms. Ms MacMillan also attached a copy of the 25 March letter to that email and reproduced the terms of cl 29 in full in the body of the email. In a later email to Mr Schmidt on 13 December 2024, Ms MacMillan again referred to cl 29 of the 25 March letter, noting that she was of the view that most reasonable people would have no difficulty with abiding with that sort of obligation once leaving employment, and in which she advised that if Mr Schmidt were to 'wilfully violate these terms, any employer has a right to take action against [him]'.
13. Despite those clear warnings, Mr Schmidt went ahead and incorporated Air-Log Australia in February 2025 before he then used that company as a vehicle to submit tenders in direct competition with Lamson. It might well be said that, in those circumstances, Mr Schmidt is the architect of any misfortune he may suffer in that respect as a result of Lamson seeking to enforce what it claims are lawfully enforceable post-employment restraints.
14. Perhaps mindful of the potential for an injunction to cause Mr Schmidt personal financial hardship, Lamson ultimately offered not only to provide the usual undertaking as to damages, but also an undertaking in the following terms:

whilst the injunctive relief granted by the Court ... continues to apply to the First Respondent:

1. the Applicant will pay to the First Respondent $10,000 each calendar month until 13 December 2025 (with a pro-rata payment for the period between 21 May 2025 and 31 May 2025 and for the period between 1 December 2025 and 13 December 2025);
2. any payment referred to in (i) above is to be reduced by any monthly earnings by the First Respondent, other than through pre-existing investments, for the duration of the injunction.

1. An undertaking in that form will reduce, to a very significant extent, the financial hardship that Mr Schmidt might otherwise suffer if he were required to comply with an injunction.
2. As I have said, I am of the view that Lamson has a strong prima facie case that Mr Schmidt breached a valid restraint of trade clause, and that there is sufficient apprehension of breach of other valid restraint of trade clauses, in the 25 March letter. Taking into account the undertaking as to damages proffered by Lamson, the separate undertaking that Lamson has indicated it would make to the Court, and all of the other factors to which I have referred, I am of the view that the balance of convenience is strongly in favour of the injunctive relief sought by Lamson.

1. Making the interlocutory orders sought by Lamson will practically determine the substance of that part of Lamson's claim that relates to the enforcement of the restraint of trade clauses in the 25 March letter. In that regard, it is highly unlikely that this aspect of Lamson's claim will be finally heard and determined before 13 December 2025, although the interlocutory orders will not practically determine the entirety of Lamson's claim as it also seeks other and substantive relief.
2. Nevertheless, having considered the strength of Lamson's case in more detail than might otherwise have been necessary in the context of an application for an interlocutory injunction, and having regard to where I think the balance of convenience lies, I reached the view that there was a sufficient likelihood that Lamson will succeed in obtaining final orders restraining Mr Schmidt from acting contrary to cl 29.3(b), (c) and (d) of the 25 March letter, to justify the making of the interlocutory orders sought.
3. Accordingly, I concluded that it was appropriate to make the interlocutory orders that Lamson sought.
4. I will now hear the parties on the question of whether any parts of my reasons for decision should be the subject of a suppression order, pursuant to s 37AF of the Federal Court of Australia Act 1976 (Cth), and on the issue of costs.

I certify that the preceding one hundred and fifty-two (152) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Vandongen.