ONE STOP WAREHOUSE PTY LTD -v- REED [2023] WASC 177 (24 May 2023)

1. OSW filed a writ endorsed with a general indorsement of claim on 3 May 2023 by which OSW seeks the following relief:

And the plaintiff claims against the first defendant:

1. An injunction restraining the first defendant until 24 February 2024 from:
   1. undertaking, carrying on, being employed or engaging directly or indirectly in any business or activity that is the same or similar to the parts of the plaintiff's business in which the first defendant worked during the 12 months prior to the first defendant's cessation of employment with the plaintiff on 24 February 2023;
   2. soliciting, canvassing, approaching or accepting any approach from any person or organisation who was at any time during the 12 months prior to the first defendant's cessation of employment with the plaintiff on 24 February 2023 a client or customer of the plaintiff; and
   3. soliciting, interfering with or endeavouring to entice away from employment with the plaintiff any employee of the plaintiff;
2. such further relief as the Court may order to enforce the restraints against first defendant contained in the Contract;

1. a declaration that any contract between the first defendant and the plaintiff annotated and signed by the first defendant on 2 February 2023 is void and unenforceable;

And the plaintiff claims against the second defendant:

1. an injunction preventing the second defendant from employing or otherwise engaging the first defendant at any time before 24 February 2024;
2. such further relief as the Court may order to prevent the second defendant from facilitating the first defendant acting in breach of the restraints against first defendant contained in the Contract; and
3. costs.
4. By chamber summons filed on 11 May 2023, OSW seeks the following injunctive relief:
   1. Until further order the first defendant be restrained from:

a) undertaking, carrying on, being employed or engaging directly or indirectly in any business or activity that is the same or similar to the parts of the plaintiff's business in which the first defendant worked during the 12 months prior to the first defendant's cessation of employment with the plaintiff on 24 February 2023;
>
> b) soliciting, canvassing, approaching or accepting any approach from any person or organisation who was at any time during the 12 months prior to the first defendant's cessation of employment with the plaintiff on 24 February 2023 a client or customer of the plaintiff; and
>
> c) soliciting, interfering with or endeavouring to entice away from employment with the plaintiff any employee of the plaintiff.

2. Until further order the second defendant be restrained from:

a) employing the first defendant; and
>
> b) otherwise engaging the first defendant to provide any services to the second defendant whether directly or indirectly through any other person or entity in any capacity, including without limitation as a contractor or consultant.

5. At the hearing of this matter, OSW did not press the injunctive relief as against Go Solar, only as against Mr Reed.
6. OSW also provided an undertaking as to the damages in the usual form.
7. OSW relies on the following affidavits in support of its application:

(a) affidavit of Mohamed Risham, sworn 9 May 2023;
>
> (b) affidavit of Rebecca Marsh, affirmed 15 May 2023;
>
> (c) affidavit of Thomas Craven, sworn 15 May 2023;
>
> (d) second affidavit of Mohamed Risham, sworn 19 May 2023; and
>
> (e) affidavit of Albert Khouri, affirmed 19 May 2023.

8. The defendants rely on the following affidavits in response:

(a) affidavit of Kirtika Vijayan Kayarat, sworn 15 May 2023;
>
> (b) affidavit of Robert Reed, sworn 18 May 2023; and
>
> (c) second affidavit of Kirtika Vijayan Kayarat, sworn 18 May 2023.

1. OSW relies on the affidavits of Mr Mohamed Risham sworn 9 May 2023 and 19 May 2023. Mr Risham (also known as Rick) is the Global Sales Executive for OSW and has held this position since 2021. However, Mr Risham has worked with OSW in other sales capacities since late 2013 (first as a Sales Manager and then as the National Sales Manager).
2. Mr Risham's evidence as to the nature of OSW business is as follows:[1]

(a) OSW carries on business as a wholesaler of solar panels and related equipment. OSW's customers are companies engaged in the retail sale of those products, including electricians;
>
> (b) when Mr Risham joined OSW it was trading only in Western Australia;
>
> (c) in 2013, there were very few electricians in Western Australia who were installing solar panels for retail customers as the price paid to the subcontracted installers was too low to make the installation work profitable for the electricians;
>
> (d) the directors of OSW, Mr Zhang and Mr Yu, then identified a method of developing OSW's customer base by assisting electricians to become solar retailers. Mr Risham then developed OSW's customer base using that method and worked with the electricians to develop their own businesses to become solar retailers;
>
> (e) OSW has developed an online Customer Relationship Management System whereby OSW's customers are able to place an order online via a customer portal and track the packing, transport and delivery of the products ordered via that portal;
>
> (f) as a consequence, OSW's customer base in Western Australia grew quickly and Mr Risham recruited additional salespeople for Western Australia and provided those new staff with training in relation to OSW's products, systems and marketing methods;
>
> (g) over the period 2014 - 2016, Mr Risham then undertook business development in other states of Australia using the method described above and established customer bases and sales teams for OSW in South Australia, Victoria, New South Wales and Queensland; and
>
> (h) OSW is undertaking business development in other countries.

3. Mr Risham deposes that OSW has developed two relevant items of technology:[2]

(a) an application called 'Solar Brain' which assimilates customer information and data available from the Clean Energy Council in relation to installations and registrations of Renewable Energy Certificates with the Renewable Energy Certificate Registry. Solar Brain draws on all of this information to create profiles of existing and potential customers, and, using those profiles, identifies potential high-value new customers and existing customers in respect of which there is potential for additional custom for OSW;
>
> (b) an application called 'Green Deal' which provides an easy system for customers to ascertain the rebates available in respect of solar modules installed at properties within various postcodes, and streamlines the process of claiming those rebates.

(a) during the period of Mr Reed's employment, OSW's customer base was quite stable and when Mr Reed ceased employment OSW had approximately 140 customers in Western Australia;
>
> (b) OSW maintained a significant market share in Western Australia throughout the period of Mr Reed's employment and as at February 2023, OSW's market share in Western Australia in relation to the wholesale of solar panels and related equipment was approximately 25%;
>
> (c) as at February 2023, OSW's revenue from WA sales contributed between 30% - 40% of OSW's profit;
>
> (d) the volume of sales to individual customers varies greatly, however as at February 2023, the projected revenue from OSW's customers for the full financial year ending June 2023 ranged from sums in the order of $10,000 to $4 million per customer.

Employment of Mr Reed and the various contracts of employment

1. OSW relies on the affidavit evidence of Mr Risham and Ms Marsh, Human Resources Manager for OSW, in relation to the facts concerning the employment of Mr Reed and the terms of his employment.
2. Mr Reed was employed by OSW in July 2018 as a Sales Account Manager.[4]
3. Mr Risham conducted Mr Reed's interview and Mr Risham deposes that he was impressed by Mr Reed's drive and motivation to succeed and wanted to give Mr Reed the same opportunities that Mr Risham had received.[5]
4. On 31 August 2020, Mr Reed was promoted to the position of Senior Account Manager and on 28 January 2022, Mr Reed was promoted to the position of Lead Account Manager.
5. During his employment with OSW, Mr Reed signed the following employment contracts:

(a) initial contract dated 17 July 2018;[6]
>
> (b) contract dated 31 August 2020;[7]
>
> (c) contract variation dated 28 January 2022;[8] and
>
> (d) purported contract dated 2 February 2023.[9]

6. The 2018 contract contained a confidentiality clause (cl 20), a non‑solicitation and non‑compete clause (cl 26) and a restraint clause (cl 27).
7. The 2020 contract contained the following relevant clauses:
   1. Post-agreement restraints - non-compete

(a) You agree that you will not, without the written consent of the Employer, during the period of: > > > (i) twelve (12) months; or if this is held to be invalid
> >
> > (ii) six (6) months; or if this is held to be invalid
> >
> > (iii) three (3) months,

after the termination of your employment and within:

(i) Australia; or if this is held to be invalid

(ii) Western Australia; or if this is held to be invalid

(iii) Perth; or if this is held to be invalid [sic]

undertake, carry on, be employed or engaged in, whether directly or indirectly, any business or activity that is the same or similar to the part(s) of the Employer's business in which you worked during the 12 months prior to your employment ending.

(b) You acknowledge that any breach by you of this clause would cause irreparable harm and significant damage to the Employer and accordingly that the Employer has the right to seek and obtain immediate injunctive relief in relation to any such breach.

(c) You acknowledge that the covenants contained in this clause are fair and reasonable and that you and the Employer intend the restraints to operate to the maximum extent and that the Employer is relying upon this acknowledgement in entering into this agreement.

(a) You agree that you will not, without the written consent of the Employer, during the period of: > > > (i) twelve (12) months; or if this is held to be invalid
> >
> > (ii) six (6) months; or if this is held to be invalid
> >
> > (iii) three (3) months,

(i) solicit, canvass, approach or accept any approach from any person or organisation who was at any time during the 12 months prior to your employment ending, a client or customer of, a supplier or contractor to, or investor in the Employer; or

(ii) solicit, interfere with or endeavour to entice away from the Employer any employee, contractor or consultant of the Employer.

(b) You acknowledge that any breach by you of this clause would cause irreparable harm and significant damage to the Employer and accordingly that the Employer has the right to seek and obtain immediate injunctive relief in relation to any such breach.

(c) You acknowledge that the that the [sic] covenants contained in this clause are fair and reasonable and that you and the Employer intend the restraints to operate to the maximum extent and that the Employer is relying upon this acknowledgement in entering into this agreement.

26 Mr Reed's base salary in the August 2020 contract was the sum of $50,000.[10] The August 2020 contract also provided for Mr Reed to receive bonuses and a KPI payment.[11] Mr Khouri's affidavit affirmed on 19 May 2023 attaches copies of various payslips and payroll activity summaries for Mr Reed. On the basis of those documents, Mr Reed earned $121,799.52 in the period 31 August 2020 to 30 June 2021 (when he was a Senior Account Manager and the August 2020 contract was applicable) and then $177,607.62 in the period 1 July 2021 to 30 June 2022 (Mr Reed was a Senior Account Manager for half of this period and the Lead Account Manager for the other half of this period).[12]

1. The contract variation dated 28 January 2022 did not result in a new contract being signed, but rather varied the August 2020 contract to alter Mr Reed's position title and internal level and commissions.

1. Mr Reed resigned from OSW by email to Ms Marsh on 27 January 2023.[13] However, prior to doing so Mr Reed told Mr Risham in a telephone call that he was going to the leave OSW and that another employee (Ms Carabott) would also leave. This telephone call occurred when Mr Risham was in Texas, USA for work. Mr Risham asked Mr Reed to wait until they could talk in person, however that does not appear to have occurred.[14]
2. Following this email, a series of telephone conversations and emails occurred between Ms Marsh and Mr Reed as part of OSW's attempts to entice Mr Reed to remain with OSW. These emails included offers to increase his salary. These offers were rejected by Mr Reed.[15]
3. Mr Reed's last day of employment was 24 February 2023.
4. Ms Marsh and Mr Risham engaged in further post‑resignation communications with Mr Reed in an attempt to entice him to return to work for OSW in late March 2023.[16] Mr Reed did not return to work for OSW.

1. There is a factual dispute between the parties as to whether OSW and Mr Reed entered into an enforceable contract dated 2 February 2023 prior to his last day of employment.
2. OSW's evidence in this regard is that a review of the remuneration structure by the directors of OSW in January 2023, led to a proposed change in the remuneration structure for the lead account managers (being an increase in the base salary and a decrease in the commission payable against their Key Performance Indicators). This change could not be implemented unless the employees signed new employment contracts.
3. On 24 January 2023, Ms Marsh emailed Mr Reed the proposed new contract (in letter form). The new contract had already been signed by Ms Marsh, and requested that Mr Reed 'read through the terms and conditions carefully and sign and date your acceptance of them before returning a signed copy'. On the last page of the contract, a clause numbered 25, and headed 'Acceptance', contained a request that Mr Reed sign and return a copy of the contract to confirm his acceptance of the offer of employment contained in the contract.[17]
4. Mr Reed had not signed the contract prior to his email of resignation to Ms Marsh on 27 January 2023.
5. On 2 February 2023, Mr Reed sent Ms Marsh the following message using the WeChat application:[18]

Signing the new pay scheme how does that change the resignation?

1. Ms Marsh's evidence is that she understood Mr Reed's question to be whether, given his resignation, if he signed the February 2023 contract, he would receive the higher base remuneration under the new contract for the remainder of his employment with OSW. With that understanding, Ms Marsh responded to Mr Reed via WeChat as follows:[19]

nothing changes even though you have resigned, the only change really is the salary paid. The structure of higher salary was to compensate the change in KPI.

You will still finish on the 28th (unless you change your mind).

I just can't update the salary to higher rate without your approval.

1. Ms Marsh deposes that after she answered this question, Mr Reed then sent her a copy of the 2023 contract via WeChat followed by the following message:[20]

1. Ms Marsh deposes that she understood Mr Reed's message to be an enquiry as to whether he had correctly signed the February 2023 contract. Ms Marsh deposes that in order to check this, she opened the February 2023 contract and scrolled directly to the second last page, which is where Mr Reed needed to sign and date the February 2023 contract, to check that he had done so. Ms Marsh deposes that she then responded via WeChat as follows:[21]

1. The February 2023 contract contains similar restraint (cl 22) and non‑solicitation (cl 23) clauses to the August 2020 contract. However, next to each of these clauses are the abbreviation 'N/A' and one signature only. That signature appears to be the same as the signature next to Mr Reed's name on the last page of the contract.[22]
2. Ms Marsh deposes that at no time during the exchange of messages with Mr Reed via WeChat on 2 February 2023, or otherwise, did Mr Reed say that he did not agree with any clauses of the 2023 Contract, or that he wished to propose any amendments to the 2023 Contract or that he had annotated the 2023 Contract.[23] Ms Marsh proceeded to update the payroll details for Mr Reed to be consistent with the 2023 Contract.[24]
3. Ms Marsh deposes that it was not until 27 February 2023 when the annotations to the February 2023 contract were brought to her attention by Ms Me Me Ong, Senior Executive Assistant to one of OSW's directors.[25]
4. Ms Marsh also deposes to having a telephone conversation with Mr Reed on 27 March 2023 at about 4.30 pm. That telephone conversation occurred when she was in a car together with Mr Risham and Ms Marsh put the phone on speaker so Mr Risham could hear. This conversation occurred in the context of further attempts being made by OSW to entice Mr Reed to return to work for OSW. Ms Marsh deposes that Mr Reed raised the matter of the restraint clauses he had agreed with his new employer and that during this conversation, Mr Reed also said:[26]

Look I am sorry if I caused you any trouble about those changes I made to the contract, I feel bad about this.

1. Ms Marsh deposes that she responded with words to the following effect:[27]

I had signed the contract. You knew that you could not just make changes to the contract without discussing them with me.

1. Mr Risham also deposes to similar effect regarding this telephone call.[28]

1. When Mr Reed commenced employment with OSW he had recently arrived as an immigrant from South Africa. According to his Curriculum Vitae,[29] Mr Reed had sales experience in the spices industry in South Africa, but no other work experience in Australia or in the solar industry.
2. Mr Risham deposes that he invested far more time in training and mentoring Mr Reed than other salespeople employed by OSW because he considered that Mr Reed had the potential to take over Mr Risham's position as manager of the WA sales team.
3. Mr Risham deposes that he provided training to Mr Reed over a three year period in relation to the technical specifications of OSW's products; the system of regulation of solar installers; the system pursuant to which government rebates can be claimed in respect of solar installations; the nature of the industry, including the buying patterns and behaviours of solar retailers; the use of OSW's IT applications; OSW's price structure (which Mr Risham says utilises its customer profiling data to categorise customers into different groups to which different price structures apply); OSW's sales strategy; and the management, recruitment and mentoring of the WA sales team.[30]
4. Mr Risham deposes that he introduced Mr Reed to OSW's customers in Western Australia, including taking Mr Reed to customers' sites and introducing him to the key contacts of each customer. Mr Risham deposes that he told OSW's customers that Mr Reed would become their point of contact, and that they could contact him for whatever they needed. Mr Risham deposes that these clients included a number of specific high‑value customers and included customers that were primarily based in other Australian states, but had branches in Western Australia (those introductions giving Mr Reed the ability to develop contacts with OSW's customers in other states of Australia). Mr Risham also deposes that he provided Mr Reed with information about OSW's customers' personnel, including their preferences and requirements in relation to dealing with OSW and purchasing OSW's products.[31] Mr Risham's evidence is that he continued to provide customer contacts to Mr Reed throughout his period of managing Mr Reed.[32]
5. Mr Risham deposes that as a result of Mr Reed's employment:[33]

(a) Mr Reed is familiar with OSW's data and the buying behaviour of OSW's customers, and knows the value of individual customers to OSW. That information allows Mr Reed to target particularly high‑value customers of OSW;
>
> (b) Mr Reed knows the pricing structures that OSW applies to particular customers and that information is not publicly available. Further, the information contained in the IT application Solar Brain gives Mr Reed and Go Solar a particular commercial advantage in competing with OSW because Mr Reed is able to inform Go Solar of OSW's current pricing for those customers, allowing Go Solar to match or compete with those prices by offering particular prices to particular customers in relation to the same or similar products;
>
> (c) Mr Reed's understanding of the way in which OSW utilises publicly available information together with customer information to create customer profiles enables him to identify customers of OSW in respect of which there is potential for him to achieve substantial sales for the benefit of Go Solar;
>
> (d) OSW provided Mr Reed with all of the necessary IT resources required for his work, including a mobile phone. Mr Risham deposes that Mr Reed used a mobile phone not only to make and receive calls to and from OSW's customers, but also to record and gain access to contact information in relation to OSW's customers, and to access OSW's marketing information, customer profiles and pricing. Although sales staff were told that they should use only the mobile phone issued to them by OSW, Mr Reed also used his personal mobile phone and his personal mobile phone number for performing his work for OSW. Mr Risham deposes that Mr Reed told Mr Risham that he synced OSW's data to both his personal mobile phone and the phone provided by OSW; and
>
> (e) Mr Reed maintained close professional relationships with OSW's customers until leaving in February 2023. Mr Risham deposes that such relationships are the linchpin of customer retention and in his experience as a salesperson in the solar wholesaling industry, customers want to be able to continue dealing with a salesperson and sales team members who know their customer's preferences and requirements, and with whom they are familiar. Mr Risham deposes that if the salesperson leaves their employment but remains in the same industry with a new employer, customers will be willing to buy from the new employer in order to continue dealing with that salesperson.

(a) in March 2023 Mr Risham noticed reduced revenue from particular customers of OSW in Western Australia;
>
> (b) in late March 2023, Mr Risham asked OSW's IT personnel to monitor the email accounts of both Mr Reed and the other employee who left at the same time. As a result, two emails have been identified which indicate Mr Reed dealing with clients of OSW in his new role with the second defendant: > > > (i) an email dated 29 March 2023 received from Mr Reed's Go Solar email address to Solar Harness; and
> >
> > (ii) an email dated 11 April 2023, received from a different OSW client (Aus Solar Co) to Mr Reed at his Go Solar email address in relation to orders for solar components for six separate customer installations (Aus Solar Co being one of OSW's highest value customers); and > >
>
> (c) during April and May 2023, OSW's data reveals reductions in sales in Western Australia in respect of over 40 customers, including high value customers.

(a) after Mr Reed gave notice of his resignation, steps were taken to deploy sales staff from the eastern states of Australia to undertake sales work in Western Australia in an attempt to ensure continued service for those customers after Mr Reed left and to build relationships with those customers; and
>
> (b) in early March 2023, steps commenced to recruit a new sales manager who would be based in Western Australia. An individual was identified in March 2023, and they commenced employment with OSW on 1 May 2023 following the completion of their notice period. That sales manager does not have experience in the solar industry. The process of training the new sales manager has begun. Mr Risham deposes that it will take the new sales manager many months to build successful relationships with OSW's customers in Western Australia.

1. Mr Reed deposes that he is 37 years of age, married, with three children aged 10, 7 and 2. Mr Reed was born and educated (to year 12 equivalent) in South Africa and immigrated to Australia with his wife and son in 2018.[36] Mr Reed confirms the information contained in his CV that he worked as a sales representative/sales manager in South Africa in the spice manufacturing industry.[37] Mr Reed's evidence is that he has no education beyond the equivalent of year 12.[38]
2. Mr Reed also deposes as to the difficulties he had in obtaining employment when he arrived in Australia, including:[39]

(a) meeting with two different recruiting agencies who were unable to secure him a job. One of those agencies told Mr Reed that his lack of relevant industry or local experience was the reason for their difficulty in finding a suitable role of employment for him;
>
> (b) attending a job interview arranged by one of those recruiting agencies, however Mr Reed was unsuccessful and he was told this was because he did not have enough industry or local experience;
>
> (c) searching for and applying for approximately 100 jobs directly, including via websites such as Seek and Linkedln.

1. Mr Reed's evidence as to how he obtained his job as a Sales Account Manager with OSW is largely consistent with the evidence given by Mr Risham (save for some differences as to who was in the interview and Mr Risham's evidence as to why he gave Mr Reed the job).[40]
2. Mr Reed's evidence does not dispute the various roles and contracts referred to in Ms Marsh's affidavit. However, Mr Reed goes on to depose as to his day‑to‑day duties in relation to the various roles. I will return to those roles in so far as they concern the role of Senior Account Manager and the August 2020 contract below.
3. Mr Reed deposes that when he initially started with OSW:[41]

(a) there were two other members of the sales team;
>
> (b) he was expected to make approximately 50 calls to customers per day (a combination of active and inactive customers) and search for new sales leads which could generate sales revenue;
>
> (c) he received basic training from Mr Risham and another member of the sales team (Mr Sun) in relation to basic product and system training, including how to create sales orders and quotations for a period of approximately two weeks;
>
> (d) he engaged in weekly meetings with both Mr Risham and Mr Sun, at which time they assigned Mr Reed customers whom they wished for him to contact and deal with. Mr Reed's evidence is that these customers were generally those with whom OSW had previously little to no success, as well as a small portion of higher value customers. Mr Reed's evidence is that when he made preliminary contact with these customers, he was advised that they generally did not deal with OSW for various reasons, including previous bad experiences, a lack of support after receiving products and faulty/poor products;
>
> (e) Mr Reed took time to listen to customers and deal with any concerns. Mr Reed says that he felt that his engagement with his customers and his willingness to attend to their needs in a prompt manner was ultimately the reason for his success in his role, rather than any particular business strategy or the use of any information or IT application; and
>
> (f) Mr Reed later began to work with more active customers.

4. Mr Reed confirms that in August 2020 he was promoted to the role of a Senior Account Manager and says:[42]

(a) the new role continued to be a sales based role, however it required a far greater level of responsibility;
>
> (b) he was expected to make a greater amount of revenue and also assist with the day‑to‑day management of administration staff;
>
> (c) the base salary increase with the new role was only approximately $2,000. Mr Reed says he was not happy with this, and when he raised his concerns with Mr Risham he was told he would likely receive a bonus at the end of the year which would make up for the minor base salary increase;
>
> (d) he did not consider there would have been any scope to negotiate the terms of the August 2020 contract at the time he received it;
>
> (e) he had a conversation with Mr Risham in late 2019 when Mr Sun left his role with OSW. Mr Reed deposes that Mr Risham told him that OSW:

had not sought to enforce a non-compete clause in Mr Sun's contract, as he had moved to a customer and not a competitor. Further, I recall that Mr Risham advised me at that time that the non‑compete clauses within OSW's contracts could not be enforced under Australian Law in any event, and he stated words to the effect that OSW 'could not stop people living their lives.'

(f) with knowledge and reliance upon the discussion with Mr Risham referred to in the above sub-paragraph, Mr Reed signed the August 2020 contract; and

(g) Mr Reed felt he was expected to take on a significant amount of responsibility in this role and that he received little to no support from OSW. Whilst Mr Risham did provide a minor amount of support at the time, his role required a national focus and he was unable to concentrate on purely the Western Australian market. Mr Reed did receive administrative assistance and for a period of approximately one year, was assisted by a sales account manager.

1. Mr Reed confirms his promotion to the position of Lead Account Manager for WA in January 2022. Mr Reed's evidence is that despite the increase in professional responsibilities in this role, his base gross annual salary was only increased by $5,000.00. Mr Reed's evidence is that he discussed this with Mr Risham who told him around that time that it was likely that he would receive a larger bonus at the end of that year as compared to his previous role. However, Mr Reed's evidence is that this did not occur and due to a different commission structure, he received a smaller commission.[43]

1. Mr Reed gives evidence as to the reasons why he decided to leave OSW. By way of summary they include:[44]

(a) a proposed change in January 2023 to the base salary and commission structure for lead account managers, which Mr Reed considered would result in an overall reduction in his earning potential;
>
> (b) a proposed change in January 2023 to the approach which was to be taken with regard to sales in the future, and that the focus of OSW was achieving the maximum possible profit from sales, rather than the former revenue based approach;
>
> (c) an interaction with the product manager of OSW and with Mr Zhang regarding providing a special price for a high value client which was refused. Mr Reed says that this was due to a new focus from OSW on seeing a greater return on investment and focus on profit rather than revenue; and
>
> (d) his increased working hours and insufficient support from OSW in his role.

2. Mr Reed's evidence is that he resigned from OSW on 26 January 2023 (Perth time)[45] and that after some negotiations and communications his final day was 24 February 2023.[46]
3. Mr Reed deposes that when he resigned and commenced with Go Solar he updated his employment details on LinkedIn and he is aware that Go Solar published a Facebook post on around 3 March 2023 advising that he had joined Go Solar.[47]

1. Mr Reed confirms that he received a copy of the February 2023 contract on 24 January 2023.[48]
2. Mr Reed deposes that he did not initially sign the February 2023 contract, as he had resigned. However, he was uncertain as to how he would be remunerated after 1 February 2023, and therefore contacted Ms Marsh. Mr Reed does not dispute the WeChat exchange as detailed on pages 61 ‑ 67 of the affidavit of Ms Marsh.
3. However, in relation to the February 2023 contract, and the restraint clause, Mr Reed's evidence is as follows:[49]

(a) in reviewing the 2023 contract, he noticed the non-compete and non‑solicitation clauses contained therein. Mr Reed says that he was unaware of the effect of these clauses, as he recalled his discussion with Mr Risham in August 2020 to the effect that a non‑compete clause was not enforceable according to Australian Law;
>
> (b) as he had already resigned from OSW and had accepted a position of employment at Go Solar, and on the basis that the purpose of the February 2023 contract was purely to implement the new remuneration structure he marked the term 'N/A' next to cl 22 and cl 23 of the February 2023 contract;
>
> (c) he sent the amended February 2023 contract back to Ms Marsh and said 'hope that is correct', to which Ms Marsh responded 'Correct, thx'. Mr Reed deposes that he was not under the impression that he had to highlight the amendments to Ms Marsh, and he expected that the amended February 2023 contract would be reviewed by OSW;
>
> (d) a few days after he returned the February 2023 contract, he was contacted by Mr Risham via telephone and they discussed the recent contracts sent to lead sales managers. Mr Reed deposes that he advised Mr Risham in this telephone discussion that he had put the term 'N/A' next to the non‑compete and non‑solicitation clauses, given that the February 2023 contract was to give effect to the new remuneration structure only and he had already resigned and had accepted employment at Go Solar. Mr Reed deposes that Mr Risham responded by asking him to send Mr Risham a copy of the amended February 2023 contract. Mr Reed deposes that:

I believe I sent this document to Mr Risham via WeChat, however I no longer have access to this as I am no longer employed by OSW. It may be that OSW are able to locate a copy of this correspondence.

1. Mr Reed confirms that he used both a work phone and personal phone whilst employed with OSW. However, he cancelled his personal phone in November 2022.[50] Mr Reed disputes that he used his personal phone for work purposes except on one occasion.[51] Mr Reed disputes that he ever told Mr Risham that he ever synced or copied the contents of his work phone to his personal phone or any other phone or personal device, or that he ever advised Mr Risham that he did. Mr Reed also disputes that he ever had the conversation referred to in [59] of Mr Risham's affidavit where Mr Risham told him that he should only use his work phone number for work. Mr Reed recalls one conversation with Mr Risham when Mr Reed was on leave and had diverted his work phone to OSW's office phone number. When Mr Risham could not reach Mr Reed due to this diversion, Mr Reed recalls Mr Risham advising him that he should remove the call diversion and instead allow calls from customers to go to voicemail.[52]
2. Mr Reed deposes that upon his cessation of employment with OSW he performed a factory reset of his work phone,[53] and that he returned his work computer and phone to OSW on 23 February 2023.[54]

1. Mr Reed confirms that he worked closely with Ms Carabott when employed by OSW. Ms Carabott was initially employed in an administrative assistant capacity, but with Mr Reed's encouragement later transitioned to the role of sales account management in May/June 2021.[55]
2. Mr Reed deposes that when he advised Ms Carabott of his resignation on or around 27 January 2023, she asked him if he had another job and where. Mr Reed deposes that he told Ms Carabott that he had accepted a job with Go Solar.[56] Mr Reed deposes that:[57]

I did not solicit or encourage Ms Carabott to seek employment with Go Solar, nor did I facilitate her gaining employment at Go Solar. I understand that Ms Carabott chose to investigate and subsequently attain employment at Go Solar independent to myself, due to her close professional relationship with me.

1. Mr Reed deposes that Ms Carabott is employed by Go Solar in an administrative capacity and not a sales capacity.[58]
2. Mr Reed deposes that he did not encourage any customers of OSW to cease custom with OSW and/or commence custom with him when he commenced at Go Solar.[59]

1. Mr Reed deposes that he did not retain any confidential information upon resigning.[60]
2. Mr Reed deposes that OSW managed their confidential information using Google Drive, and information as to customer buying patterns were stored on a Google shared Excel sheet. His access to each was revoked upon returning his work computer and phone on 23 February 2023.[61]
3. Mr Reed also deposes:[62]

To the extent that there is OSW confidential information which has the potential to be utilised (which I do not consider there is), I have not done so. In stating this, I am sceptical of the extent to which any OSW information could be utilised even if a person were to attempt to exploit such information. In this regard, most wholesalers change their prices regularly. OSW generally changed its prices relatively regularly, and normally on a monthly basis.

Further, irrespective of whichever customer contacts me, if I am engaged in a sales related discussion with a customer, I am able to ask the customer if they have received a quote from a competitor and if so, what price the competitor is requesting for the products. Often, this information will be volunteered by the customer without the sales person even requesting this information, as it is in the customer's best interest to advise of the details of a competing quote, in order to provide them with the best opportunity to better that quote. I therefore believe that any sales person in the solar industry could easily acquire details as to the price that any competitor has quoted a customer.

1. Mr Reed confirms that a number of post‑employment discussions/correspondence took place between himself, Mr Risham and Ms Marsh, but that ultimately Mr Reed decided to stay with Go Solar.[63]
2. Mr Reed confirms that he had a telephone conversation with Ms Marsh on 27 March 2023, but he was not aware Mr Risham was in the presence of Ms Marsh at the time. Mr Reed deposes that:[64]

Whilst I was speaking to Ms Marsh on the phone, I apologised to her on the basis that I did not wish for Ms Marsh to be upset or in trouble from OSW due to the changes that I had made to the 2023 Employment Contract. Ms Marsh responded to the effect that she would have liked if I had brought the changes to her attention. I do not recall Ms Marsh stating words to the effect that I knew I could not make changes without informing her, as alleged in paragraph 46 of the Marsh Affidavit.

(a) both OSW and Go Solar are solar wholesalers;
>
> (b) there are approximately 10 to 12 different solar wholesalers in the Western Australian market. Not all of those solar wholesalers have business premises in Western Australia;
>
> (c) OSW is one of the largest solar wholesalers in the Western Australian solar market in terms of employee numbers and number of solar products;
>
> (d) on the basis of his experience in the solar industry, the biggest solar wholesale competitors of OSW at the moment are Raystech and Tradezone;
>
> (e) Go Solar is a smaller solar wholesale company as compared to OSW, both in terms of employees and number of products but is rapidly growing in terms of employee numbers and sales revenue;
>
> (f) Go Solar currently sells a limited range of products which are largely separate and distinct to the range of products sold by OSW with only two brands being sold by both OSW and Go Solar;
>
> (g) the solar industry in Western Australia is relatively small, and those that work in the industry are widely known to one another, including wholesalers, electricians, retailers and installers. Mr Reed deposes that customers regularly use a variety of wholesalers, including both OSW and Go Solar, to purchase products as and when required. Mr Reed deposes that in his experience customers generally do not have any loyalty to any particular solar wholesaler, and change their use of wholesalers regulatory depending on their needs; and
>
> (h) once commencing with Go Solar, Mr Reed deposes that he became aware of the Go Solar client base and noted that many of OSW's clients were also Go Solar clients, and had been clients of Go Solar for some time prior to his commencement with Go Solar. Further, Mr Reed deposes that Go Solar has many clients which were not clients of OSW and that Go Solar has a wider variety of clients as compared to OSW.

(a) a major competitor in the solar wholesale market named Tradezone opened its first branch in Western Australia in December 2022. Mr Reed deposes that Tradezone is a large solar wholesaler like OSW and offers a very good range of products at good prices;
>
> (b) from his recollection, OSW fell short of its sales targets in Western Australia during December 2022 and January 2023; and
>
> (c) in his view, the reason for the loss of custom in December 2022 and January 2023 was due to multiple factors, including OSW's implementation of a profit driven approach to sales and the introduction of the competitor Tradezone in the Western Australian market.

1. Mr Reed deposes that his role is different at Go Solar. Mr Reed deposes that with OSW he was employed almost exclusively in a sales based role and he took a pro‑active approach and actively contacted clients to entice them to purchase solar products. At Go Solar Mr Reed deposes that he is employed in the role of a brand ambassador and whilst there is a sales element it is more reactive and generally involves customers calling Mr Reed when requiring products and services.[67]

1. Mr Reed deposes that given his entire Australian work experience has been in the solar industry, and given there is no comparable industry in Western Australia to the area he worked in when in South Africa, he does not consider that he would be able to attain comparable employment with similar income in any other industry, without at least some experience in that industry.[68]
2. Mr Reed deposes that his most significant financial obligation is his mortgage repayments and that he also makes substantial repayments on his car loan, caravan loan and credit card debts. Mr Reed estimates his fortnightly expenses in making payment of bills and essentials, such as food expenses to be $4,300.00 per fortnight and deposes that in the event that he would be unable to work in his employment at Go Solar, he would have significant and serious concerns in relation to his capacity to meet his financial obligations.[69]

1. On 16 May 2023 Mr Reed provided an undertaking to the court, which is attached at Annexure 1 to these reasons. By way of summary, Mr Reed undertakes:

(a) to comply with all confidentiality undertakings in the August 2020 contract and s 183(1) of the Corporations Act 2011 (Cth);
>
> (b) that he has returned to OSW all property in his possession, custody or control containing confidential information which he is aware of including documents or records that are stored electronically and any computer hardware;
>
> (c) for the period until 24 August 2023 or the final determination of these proceedings (whichever occurs first) to not solicit, canvass, approach or accept any approach from the following clients in the Western Australian Solar Industry: Perth Solar Warehouse; Empower Solar Perth; Perth Solar Force; Solar Lifestyle; Green Wiring; Green Logic and Aus Solar Co; and
>
> (d) for the period until 24 February 2024 or the final determination of these proceedings (whichever occurs first) to not solicit, interfere with or endeavour to entice away from OSW any employee, contractor or consultant of OSW.

1. The plaintiff filed two affidavits in reply to the defendants' evidence: a second affidavit of Mr Risham, sworn 19 May 2023 and the affidavit of Albert Khouri, affirmed 19 May 2023.
2. Mr Khouri's affidavit attached copies of various payslips and payroll activity statements for Mr Reed. I refer to the details of these in other places in these reasons.
3. In relation to Mr Risham's second affidavit, in addition to the matters already referenced, by way of summary Mr Risham disagrees or has a different memory of aspects of the following matters the subject of Mr Reed's affidavit:

(a) who attended the original job interview for Mr Reed;[70]
>
> (b) the role played by Mr Risham in introducing Mr Reed to the various customers, including high value customers.[71] Mr Risham deposes that he continued to identify potential customers to Mr Reed throughout his management of Mr Reed at OSW. Those customers were identified via Solar Brain;[72]
>
> (c) Mr Risham disagrees that there had been any reduction in revenue in Western Australia in December 2022.[73] Mr Risham also deposes that sales are ordinarily quiet in January of each year as the installers are on holiday, with sales being their busiest in the months closest to the end of the financial year;[74]
>
> (d) Mr Risham disagrees that Tradezone and Raystech are major competitors of OSW;[75]
>
> (e) Mr Risham has a different recollection of his conversations with Mr Reed about the non‑compete clauses. Mr Risham deposes that in relation to Mr Sun, he took a six month break from work before starting with a customer. Mr Risham also deposes that he did not say anything to Mr Reed to the effect that OSW did not or could not enforce non‑compete clauses;[76]
>
> (f) Mr Risham has a different recollection of the telephone call between himself and Mr Reed in January 2023 when Mr Reed told him that he was going to leave OSW. Mr Risham deposes that Mr Reed told him that he was taking Ms Carabott with him, and did not tell him that he was going to Go Solar;[77]
>
> (g) Mr Risham has a different recollection of the conversations he had with Mr Reed after he left in which he attempted to entice Mr Reed to stay with OSW;[78] and
>
> (h) Mr Risham does recall a conversation with Mr Reed not long after he submitted the February 2023 contract to Ms Marsh. Mr Risham deposes that Mr Reed did tell him about putting 'N/A' next to the restraint clauses. However, Mr Risham's recollection is that he thought Mr Reed may return to OSW, and Mr Reed was worried that he may get into trouble for putting 'N/A' next to the restraint clauses. Mr Risham's recollection is that Mr Reed was worried that if he returned it would be held against him or OSW would be angry. It was in this context, Mr Risham deposes, that he told Mr Reed that if he stayed it would be ok, but he should apologise. Further, Mr Risham deposes that he did not tell anyone about this at the time as he thought Mr Reed would stay with OSW.[79]

(a) the list of high value customers referred to in [29] of his first affidavit were merely examples and were not intended to be an exhaustive list.[80] Mr Risham goes on to identify some additional high value customers he introduced Mr Reed to;
>
> (b) he is able to use Solar Brain to identify the proportion of custom OSW received from particular customers. Mr Risham deposes that he has identified a number of customers who formerly gave a percentage of their custom to OSW and, subsequent to Mr Reed leaving, no longer do. Mr Risham goes on to list seven such clients and the relevant percentages: Perth Solar Warehouse; Aus Solar Co; Green Wiring; Green Logic; Metro Solar and Kaejen Services; [81]
>
> (c) he has observed Mr Reed with two phones both when working for OSW and after working for OSW;[82]
>
> (d) in relation to pricing, all wholesalers adjust their prices when the prices charged by the manufacturers change with inflation and as the Australian dollar changes in value;[83] and
>
> (e) that Mr Reed has knowledge of the prices at which OSW is able to buy its products and knows how OSW would alter its prices to take account of inflation or the change in the value of the Australian dollar. Mr Reed also knows which customers fall into which pricing category based on OSW's customer profiling. Mr Risham deposes that all this knowledge enables Mr Reed to know whether a customer's quoted OSW price is true.[84]

1. The parties have attached to the affidavits of Thomas Craven and Kirtika Vijayan Kayarat various correspondence sent between the parties and/or their solicitors. I have not summarised each of those items of correspondence here but have reviewed each and refer to the relevant items later in these reasons.

1. The general principles applicable to the exercise of the power to grant an interlocutory injunction were not in dispute. They were summarised by Newnes JA (with whom McLure P and Corboy J agreed) in Mineralogy Pty Ltd v Sino Iron Pty Ltd as follows:[85]

The principles to be applied on an application for an interlocutory injunction are well-known and were not in dispute. The two main enquiries that arise are whether the plaintiff has made out a prima facie case and whether the balance of convenience favours the grant of the injunction. The first inquiry as to a 'prima facie case' does not mean that the plaintiff must show that it is more probable than not that at trial the plaintiff will succeed. It is sufficient that the plaintiff show a sufficient likelihood of success to justify, in the circumstances, the preservation of the status quo pending the trial. How strong the probability needs to be depends upon the nature of the rights the plaintiff asserts and the practical consequences likely to flow from the orders the plaintiff seeks. The second inquiry is whether the inconvenience or injury which the plaintiff would be likely to suffer if an injunction were refused outweighs, or is outweighed by, the injury which the defendant would suffer if an injunction was granted. Whether an applicant for an interlocutory injunction has made out a sufficient prima facie case and whether the balance of convenience favours the grant of such relief are related, not independent, questions.

1. There is also no dispute as to the principles which govern restraints of trade. A restraint of trade clause is contrary to public policy and prima facie void, unless the restraint is reasonable to protect the legitimate interests of the party seeking to enforce it. The validity of a restraint is to be considered as at the date of the contract.[86]
2. The leading appellate authority in this jurisdiction is Smith v Nomad Modular Building Pty Ltd,[87] in which McLure JA held:

[6] The test to be applied in determining the validity of a restraint of trade was stated by Lord Macnaghten in Nordenfelt v The Maxim Nordenfelt Guns and Ammunition Co Ltd [1894] UKLawRpAC 52; [1894] AC 535 at 565 in a passage that has been cited with approval in many cases. Lord Macnaghten said:

All interference with individual liberty of action in trading, and all restraints of trade of themselves, if there is nothing more, are contrary to public policy, and therefore void. That is the general rule. But there are exceptions: restraints of trade and interference with individual liberty of action may be justified by the special circumstances of a particular case. It is a sufficient justification, and indeed it is the only justification, if the restriction is reasonable - reasonable, that is, in reference to the interests of the parties concerned and reasonable in reference to the interests of the public, so framed and so guarded as to afford adequate protection to the party in whose favour it is imposed, while at the same time it is in no way injurious to the public.

[7] The validity of the restraint must be decided as at the date of the contract: Amoco Australia Pty Ltd v Rocca Bros Motor Engineering Co Pty Ltd [1973] HCA 40; (1973) 133 CLR 288 at 318 per Walsh J. However, subsequent developments may be looked at, not to determine whether the agreement was reasonable as between the parties but to determine whether it was a reasonable one to make at the relevant time, having in mind the best estimate they could make for the future: Putsman v Taylor [1927] 1 KB 637 at 643.

[8] A restraint is reasonable in relation to the restraining party if it is necessary for the adequate protection of that party and reasonable in relation to the party restrained if it preserves the fullest liberty of action consistent with that protection: Brightman v Lamson Paragon Ltd [1914] HCA 90; (1914) 18 CLR 331 at 337 per Isaacs J; Buckley v Tutty [1971] HCA 71; (1971) 125 CLR 353 at 376.

[9] ... Whether a restraint of trade is reasonable is a question of law which depends on the true construction and legal effect of the contract: Amoco Australia at 305 per Walsh J; Haynes v Doman [1899] UKLawRpCh 69; [1899] 2 Ch 13 at 24 per Lindley MR.

[12] The proper course is to examine the range of interests relied on by the respondent said to require protection and to determine whether one or more of those interests are reasonable by reference to the interests of the parties to the contract and the interests of the public. ...

[14] However, if any actual or potential effect on goodwill, direct or indirect, is a protectable interest of the employer, that would justify a restraint clause preventing a former employee taking employment with a competitor merely because the new employer was a competitor. ...

1. Pullin JA (in the same case) stated:[88]

Covenants that restrain an ex-employee from competing with the ex‑employer are at common law contrary to public policy and void unless it can be justified by the special circumstances of the case. Special circumstances means no more than the facts of the particular case from which reasonableness can be inferred. The Court will judge whether the restriction is reasonable having regard to the interests of the parties concerned and to the interests of the public. If the restraint is not reasonable by reference to the interests of the parties and the public then it is contrary to public policy and void. Buckley v Tutty [1971] HCA 71; (1971) 125 CLR 353 at 376; Lindner v Murdock's Garage [1950] HCA 48; (1950) 83 CLR 628 at 653 and Portal Software International Pty Ltd v Bodsworth (2005) NSWSC 1179 per Brereton J at [63].

An employer is not entitled to be protected against mere competition, but a restraint clause to protect confidential information which is reasonable as to the time and geographical extent will not be contrary to public policy.

1. See also Sino Iron Pty Ltd v Mineralogy Pty Ltd [No 2];[89] Twinside Pty Ltd v Venetian Nominees Pty Ltd;[90] Portal Software International Pty Ltd v Bodworth.[91]
2. A question of delay arises in the present case. The legal principles relevant to delay in the context of an interlocutory injunction were helpfully summarised by Solomon J in Emission Assessments Pty Ltd v James Jackson as follows:[92]

The issue of delay in such applications was discussed by Einstein J in Idoport Pty Ltd v National Australia Bank Ltd (No 1):

A most significant and well understood discretionary consideration in relation to interlocutory applications for injunctive relief, and for relief in the nature of appointment of receivers and managers, is and has always been that a plaintiff requires to commence such proceedings with special expedition. A plaintiff who sits on his or her hands, whilst well aware that claimed rights are being infringed, takes the risk that interlocutory relief may be refused depending upon all the circumstances.

In Meagher, Gummow & Lehane's Equity: Doctrines and Remedies, the learned authors stated:

As far as laches and delay are concerned, the cases are full of warnings. Megarry J in Legg v Inner London Education Authority nearly declined interlocutory injunctions because the plaintiffs had been guilty of 12 weeks' delay and Goff J in Texaco Ltd v Mulberry Filling Station Ltd was troubled by a lesser period. Excessive delay was the plaintiff's downfall in Carlton and United Breweries (NSW) Pty Ltd v Bond Brewing New South Ltd. However, in Express Newspapers plc v Liverpool Daily Post and Echo plc, Whitford J refused to uphold a defence of delay where the occasion of the delay was that the plaintiff was seeking undertakings in lieu of an injunction from the defendant. Obviously if the delay is coupled with some such factor as the intervention of third-party rights or prejudice to the defendant, an interlocutory injunction should be refused just as a final injunction should be refused. But authority is not wanting that on an interlocutory application - where different principles apply from those which would be applicable on a final hearing - mere delay of itself can (not must) be fatal. Why should a court grant urgent relief when the plaintiff's tardiness in applying for it casts doubt on the reality of the alleged injury?

In this court, Le Miere J observed in Jaddcal Pty Ltd v Minson:

Excess delay, whilst not fatal, is a factor that weighs against the court not granting an interlocutory injunction: Carlton and United Breweries (NSW) Pty Ltd v Bond Brewing New South Wales Ltd [1987] FCA 412; (1987) 76 ALR 633.

1. As this is an application for an interlocutory injunction, my views and opinions as to whether there is a serious question to be tried are views expressed as to the strength of the serious question to be tried. They are not views as to the final merits of OSW's case.

1. The correspondence exchanged between the parties reveals that a key issue of contention was whether the August 2020 or the purported February 2023 contract governs the terms of Mr Reed's employment at OSW. For this reason, the plaintiff's written submissions address this issue in some detail.
2. The defendants' written submissions however accept that the August 2020 contract is the contract which governs the terms of Mr Reed's employment.[93]
3. I am also satisfied on the basis of all of the evidence that OSW has established a serious question to be tried that Mr Reed's employment was subject to the August 2020 contract and that the annotated version of the February 2023 contract was not agreed to by OSW and was a counter‑offer to OSW only. Given the acceptance of this issue by the defendants it is not necessary to detail my reasons for that reaching that conclusion.
4. I also note OSW's alternative submission that if the February 2023 contract is found to have been accepted by OSW, then it is voidable on the basis of fraudulent misrepresentation by Mr Reed. It is not possible to resolve the facts necessary to determine the strength of this submission at this interlocutory stage. Given my conclusion that the plaintiff has established a serious question to be tried in relation to the status of the February 2023 contract as a counter‑offer, it is not necessary to consider this alternative submission any further at this interlocutory stage.

1. Proceeding on the basis that the August 2020 contract is valid, it is necessary to determine whether the plaintiff has established a serious question to be tried that restraints in cl 21 and cl 22 are reasonable and necessary for the adequate protection of OSW's interests.
2. The defendants accept that the plaintiff has established a serious question to be tried, but say that the plaintiff's case is weak.[94]
3. Whether a restraint of the nature that OSW seeks to enforce, which is, in essence, a restraint against competition, is reasonable is a question of law. It requires an evaluative judgment to be made by the court. The plaintiff bears the onus of proof.
4. The plaintiff does not press the Australia wide geographical location aspect of the restraint in cl 21 and instead presses only the Western Australian geographical location.
5. Counsel for OSW submitted that the purpose of cl 21 is to protect OSW's connection with its clients.[95] OSW's case is that the reasonableness of the restraint is met on the basis of connectivity with clients alone, but is bolstered by the need to protect confidential information about OSW.
6. I accept that given the nature of OSW's business and Mr Reed's role, OSW is entitled to some contractual protection of its client connections and goodwill. However, the question is whether a 12 month restraint, or alternatively a six month restraint, or alternatively a three month restraint is reasonable.
7. The reasonableness of the clause is to be assessed as at the date of the contract,[96] although later developments can be relevant in assessing the reasonableness having in mind the best estimate that the parties could make for the future at the time of entering into the contract.[97] As at August 2020, Mr Reed was a Senior Account Manager. A copy of Mr Reed's duties in this position is not included in either the August 2020 contract[98] or Ms Marsh's affidavit. However, I note that Mr Reed received a promotion to Lead Account Manager in January 2022.[99] A document setting out Mr Reed's duties in that position is included in Ms Marsh's affidavit.[100] As at that later date, Mr Reed was responsible for managing the state's revenue (in this case Western Australia); customer satisfaction in Western Australia; managing market share in Western Australia; maximising profit; recommending sales programmes; setting short and long term sales strategies and providing direction and leadership to the account managers.
8. Accordingly, I infer that Mr Reed's position as at August 2020 was not of the same level as from January 2022, and Mr Reed did not have as high a level of responsibility and was not in charge of all sales in Western Australia. Mr Reed appeared instead to be above his original level of Account Manager and became responsible for providing 'direction and leadership to Account Managers'.
9. The plaintiff submits that it is also appropriate to have regard to the parties best estimate as to Mr Reed's future with OSW as at the date of entering into the August 2020 contract.[101] In particular, the plaintiff relies on the fact that Mr Reed would continue to make and maintain customer contacts (and therefore customer connectivity would continue or increase) and that Mr Reed may be promoted.
10. I accept that Mr Reed's role, as both an Account Manager and a Senior Account Manager, means that he was the face of OSW to his various customers and as at August 2020 he had developed customer connections with his clients, some of whom were high value customers. I accept that OSW had invested time and money in Mr Reed's development and that some of the customer contacts were both valuable and long‑term contracts, which Mr Risham had introduced to Mr Reed. It was also reasonable for the parties to assume, as at August 2020, that this would continue. Therefore, I accept that OSW is entitled to some protection for this.
11. I accept that further promotion is something that Mr Risham had in mind as a possibility for Mr Reed when he hired him and, objectively, further promotion for Mr Reed may occur in the future. However, as at August 2020 Mr Reed was not the most senior sales person in OSW in Western Australia (or indeed Australia) and he was not a member of the executive management team of OSW. He was instead a senior sales employee.
12. The consideration for the restraint clauses is also relevant. Mr Reed's base salary in the August 2020 contract was only a modest sum of $50,000.[102] However, I accept that Mr Reed's contract provided for the payment of bonuses and/or KPI payment.[103] The bonus provided for in the August 2020 contract appears to be discretionary, and there is no detail as to precisely what or how the bonus or KPI payment is calculated in the August 2020 contract. However, the plaintiff has provided copies of Mr Reed's payslips and payment activity statements. These reveal that with bonuses and KPI payments Mr Reed earned $121,799.52 in the period 31 August 2020 to 30 June 2021 (when he was a Senior Account Manager) and then $177,607.62 in the period 1 July 2021 to 30 June 2022 (Mr Reed was a Senior Account Manager for half of this period and the Lead Account Manager for the other half of this period).[104]
13. I accept that Mr Reed had entered into the August 2020 contract and therefore agreed to abide by these restraints and agreed that they are reasonable. However, I accept that Mr Reed had limited ability to negotiate these clauses. The evidence demonstrates that offers and contracts were provided to him with the expectation that he sign and, as counsel for the plaintiff accepted, OSW was always going to insist on the inclusion of some form of restraint clause.
14. Although proof of a breach of the restraint clauses is not required,[105] the plaintiff has provided evidence which it says demonstrates a breach of the restraints. In this regard, I note that whilst there is no direct evidence that Mr Reed has canvassed or solicited OSW clients, there is evidence that Mr Reed, whilst working for a competitor, has been in communication with two of OSW's clients and that communication suggests that Go Solar is selling products to those clients (although it is not clear who approached who). Therefore, I accept that there is justification for concern on the part of OSW and OSW is entitled to be protected against the risk of a breach (or continuing breach).
15. OSW has not provided any direct evidence of any breach of the covenants regarding the use of confidential information. Mr Reed's evidence (which is not controverted) is that he returned his work phone and computer when he ceased working for OSW and that his access to OSW's databases (where any confidential information was stored) also ceased. I accept that there is a dispute on the facts as to whether Mr Reed had synced his personal phone to his work phone which I cannot resolve at this interlocutory stage. Nonetheless, I accept that in a situation where Mr Reed has been privy to confidential information (including the pricing information and the customer profiles generated in the Solar Brain application) there is always a concern regarding the extent to which this information may be remembered and used by the employee once their employment concludes.
16. I also accept that Ms Carabott has commenced work with Go Solar. Mr Reed's evidence is that he did not solicit Ms Carabott to apply to work with Go Solar, and that she did this on her own. Mr Risham's evidence is to the contrary. I cannot resolve this factual issue at this interlocutory stage. Mr Reed's evidence is also that Ms Carabott is working as an administrative assistant and not in a sales role. However, I accept that based on Ms Carabott now also working for Go Solar, there is justification for concern on the part of OSW that Mr Reed may solicit other employees and that OSW is entitled to be protected against the risk of a breach (or further breaches).
17. Given the evidence at this interlocutory stage as to the nature and extent of Mr Reed's role, the amount of his salary (base and with bonuses), the need for protection for OSW of its customer connections, confidential information and employee base, I consider that OSW has established a serious question to be tried as to the reasonableness of the restraint clauses, but the strength of OSW's case in relation to a 12 month and/or a six month restraint is weaker.

1. The reasonable prospects of OSW's case and the balance of convenience are not factors to be considered independently of each other.
2. The apparent strength of OSW's case (and its weaker case in so far as it concerns restrictions of 12 months and/or six months duration) is a relevant factor to be considered.
3. Also relevant is the length of time that Mr Reed has already been working for Go Solar, and OSW's delay in applying for injunctive relief. On the basis of the evidence filed to date, OSW was aware that Mr Reed was working for Go Solar (or suspected he was working for Go Solar) from on or around 2 March 2023 as the plaintiff's solicitors wrote to both Mr Reed and Go Solar in this regard on 2 March 2023.[106] The defendants' solicitors responded with a letter dated 7 March 2023,[107] and correspondence then continued between the solicitors and/or Mr Reed until 9 May 2023. Counsel conferral also took place in May 2023.[108]
4. Although Mr Reed's evidence is that he told Mr Risham he was going to work for Go Solar on or about 27 January 2023,[109] Mr Risham denies this.[110] As this factual dispute is not able to be resolved at this interlocutory stage, I have proceeded on the basis that OSW was aware that Mr Reed was working for Go Solar (or suspected he was working for Go Solar) from on or about 2 March 2023.
5. I accept that during this period OSW was not sitting on its hands and doing nothing. The correspondence indicates that the parties were conferring and OSW was at various points seeking confirmation from Mr Reed that he would comply with the terms of the restraint clauses. The correspondence also indicates that at first OSW was proceeding on the basis that the February 2023 contract was applicable and the defendants were asserting that the restraint clauses in the February 2023 contract were not applicable. Later correspondence refers to the August 2020 contract. I accept that the question of which contract applied and the effect of Mr Reed's annotations to the February 2023 contract was an added complication.
6. Further, there was a period starting on 28 April 2023 and continuing into early May 2023 when it appears that counsel for OSW was attempting to confer with and then did confer with counsel for the defendants. I also note that during this time OSW moved sales staff to Western Australia from other states and hired a replacement for Mr Reed (who started on 1 May 2023).
7. However, the fact remains that Mr Reed commenced working for the second defendant on 2 March 2023 and the writ was not filed until 3 May 2023 and the application for the injunction was not filed until 11 May 2023. Accordingly, Mr Reed has now been working for Go Solar for almost 2.5 months. The defendants say this delay is significant. The plaintiff says it is relevant, but not fatal.
8. A consequence of the delay is that to the extent Mr Reed has any confidential information (which he denies) or may know information which will give Mr Reed and Go Solar a competitive advantage, Mr Reed has been able to use that information since he commenced at Go Solar, and the currency of any of that information has diminished over the course of the 2.5 month period. In relation to pricing information, the evidence is that this changes monthly. Further, to the extent that upon commencing at Go Solar Mr Reed was in the position to solicit any of OSW's clients, this has been possible for 2.5 months. Therefore, there is a question as to the utility of an injunction at this point in time.
9. It is also relevant that the plaintiff has had 2.5 months to take steps to change its pricing structure so that Mr Reed is not aware of the latest pricing information so as to prevent Mr Reed from being in a position to use the pricing structure he is aware of against OSW.
10. Further, even allowing for an expedited trial and decision, in the event that a final hearing determines that only a three month restraint (or no restraint) is reasonable, if an injunction is granted there is a risk that Mr Reed may be restrained for longer than is ultimately held to be reasonable.
11. It is also relevant that since 27 January 2023 (when Mr Reed resigned), OSW has had the opportunity to commence looking for a replacement for Mr Reed. I accept that it is relevant that it will take some time to identify and train a replacement. However, the length of time is not clear. I also note that the fact that OSW initially moved sales staff over from the eastern states, and this did not work, is not a matter for which Mr Reed is responsible.
12. Also relevant to the balance of convenience is the damage that will be caused to OSW if the injunction is not granted. In this regard I accept that OSW has invested in Mr Reed's development, and OSW is entitled to a degree of protection for their customer connections, confidential information and employee base.
13. OSW has filed evidence which it submits provides evidence that OSW is suffering loss following Mr Reed's departure. Mr Risham's evidence is that OSW's data from April and May 2023 reveals reductions in sales in Western Australia in respect of over 40 customers, including high value customers. Mr Risham also deposes that using the data collated in Solar Brain, OSW has been able to identify the proportion of custom OSW received from particular customers and the reduction in custom from seven identified clients since Mr Reed left OSW.[111] The cause of this reduction in custom is contested by the defendants and I accept that I cannot resolve this controversy at this interlocutory stage. There is also evidence that one other former employee of OSW is now employed with Go Solar.
14. OSW submits that if the injunction is not granted, damages will be an insufficient remedy as the amount of damage suffered by OSW over the 12 month restraint period will be of such magnitude that Mr Reed will be unable to satisfy the award. For the reasons outlined above, I consider that the plaintiff's case for a 12 month or a six month restraint period is weaker and therefore I consider it more appropriate to consider at this stage the likely damage over the smaller three month period. Further, at this stage there is insufficient evidence to form a view either way as to the causative link between Mr Reed leaving and the reduction in profit experienced by OSW. Whilst I accept that damages can be difficult to prove in restraint cases, I do not consider it is clear that damages are necessarily an insufficient remedy in the present case.
15. The effect of granting an injunction on Mr Reed is also relevant. I accept that if Mr Reed is retrained from working for Go Solar, then he may suffer hardship. That hardship will be in the form of his salary which will in turn impact his ability to pay his monthly expenses. I also accept that Mr Reed only immigrated to Australia in 2018, and his job with OSW has been his only employment in Australia since he immigrated. Mr Reed's evidence is that he had difficulty in finding employment in Western Australia when he first arrived due to his lack of local industry experience. I also accept Mr Reed's evidence that the industry in which Mr Reed worked in South Africa has no equivalent in Australia. I therefore accept that given his education and work history and immigration status, Mr Reed may face difficulties in finding other employment in Western Australia if he cannot work in the solar industry at all, or at the very least may face difficulties in finding suitable employment in a reasonable time frame. This hardship is compounded by the fact that Mr Reed has already left OSW and has been working for Go Solar for 2.5 months and therefore the effect of the injunction will be that he cannot work until he finds another position.
16. I note that OSW submits that Mr Reed could readily obtain employment outside of the solar industry, and that his skills are readily transferable. I note that OSW has not provided any evidence to support this submission, and only made a submission to this effect. Given the evidence filed by Mr Reed in relation to his work history and experience, I do not consider this to be a strong submission. However, I accept that given Mr Reed's experience it may be possible for Mr Reed to find employment in the solar industry but working instead for a manufacturer or a retailer (as Mr Sun did).
17. I also accept that Mr Reed signed the August 2020 contract and agreed to the terms, including the restraints, and therefore his current difficulty is in part due to him taking the risk of leaving OSW's employment and working for a competitor in circumstances where the restraints may be enforced. I note that Mr Reed's evidence is that Mr Risham had previously informed him that OSW had not enforced restraints when Mr Sun left to work for a customer. Given Mr Risham's second affidavit, I do not consider Mr Sun's experience to be similar to Mr Reed's, in that Mr Sun left to work for a customer (not a competitor) and he took a six month break from work before doing so. Mr Reed's evidence is also that Mr Risham told him that restraint clauses are not enforceable under Australian law. Mr Risham disputes this. I am not able to resolve this conflict in the evidence at this interlocutory stage, but Mr Risham is not a lawyer and there is no evidence that Mr Reed sought his own advice before signing the August 2020 contract. Therefore, I place limited weight on this aspect of Mr Reed's evidence at this interlocutory stage.
18. I note that OSW submits that the annotations made to the February 2023 contract, and the circumstances surrounding those annotations (in particular not telling Ms Marsh), suggest that there is a strong likelihood that if Mr Reed is left unrestrained by an injunction he will actively engage in breaching the restraints. In light of the undertaking provided by Mr Reed,[112] I do not consider that this proposition is as strong as OSW submits. But nonetheless, I accept that OWS is entitled to some form of protection against this risk, particularly in relation to non-solicitation of OSW employees given Ms Carabott's move to Go Solar.
19. The relatively modest base remuneration guaranteed to Mr Reed under the August 2020 contract is also relevant. Mr Reed's base salary is $50,000, although he has the ability to earn commissions and bonuses, and the evidence establishes that he earned $121,799.52 in the period 31 August 2020 to 30 June 2021 (when he was a Senior Account Manager and the August 2020 contract was applicable) and then $177,607.62 in the period 1 July 2021 to 30 June 2022 (Mr Reed was a Senior Account Manager for half of this period and the Lead Account Manager for the other half of this period).[113]
20. I do not consider even at these levels it can be said that Mr Reed was earning a sum of money commensurate with a top level executive or manager. I accept however that OSW offered substantial increases in Mr Reed's base salary once Mr Reed resigned in an attempt to entice him to stay. Again, it is relevant that Mr Reed chose to nonetheless leave OSW and run the risk that the restraints would be enforced.
21. I accept that the undertaking as to damages given by OSW is relevant.
22. The undertaking provided by Mr Reed is also relevant. The terms of that undertaking are set out in Schedule 1 to these reasons and I note that they are extensive. Whilst not going as far as the terms of the injunction sought by OSW, the undertaking does address the issue of confidential information and non-solicitation of employees of OSW. Mr Reed undertakes to comply with his confidentiality obligations and agrees not to solicit employees of OSW until 24 February 2024 (12 months) and undertakes not to solicit the high value clients identified in Mr Risham's first affidavit until 24 August 2024 (a period of six months). I accept there may be other high value clients not identified in Mr Risham's first affidavit, but I note that this list includes all but two of the high value clients referred to in [15] of Mr Risham's second affidavit, and I otherwise consider the undertaking to be expansive, given my preliminary assessment of the strength of the plaintiff's case as to the reasonableness of the restraint clause.

1. Having considered and balanced all of the relevant factors and evidence, I am not satisfied that the balance of convenience favours granting the injunction.
2. I am of the view that the weakness of the plaintiff's case as to the reasonableness of the full extent of the restraint clauses in the August 2020 contract; the delay of OSW in bringing its application for injunctive relief; the amount of time that Mr Reed has already spent working for Go Solar; the undertaking given by Mr Reed and the harm that Mr Reed might suffer outweigh the various factors identified in these reasons in favour of granting an injunction relied on by the plaintiff. Rather, I consider it is appropriate that the matter proceed to an expedited hearing, preceded by a mediation conference.

The undertaking is provided for the purpose of proceedings in Supreme Court Action No. CIV‑1441 of 2023.

I, Robert Reed of [address provided], Brand Ambassador of Go Solar Group Pty Ltd provide the following undertaking to the Court in relation to One Stop Warehouse Pty Ltd (Company):

1. I will comply with the confidentiality obligations in my employment contract dated 31 August 2020 (Contract) and section 183(1) of the Corporations Act 2001 (Cth) including the obligation not to use or disclose any confidential information (including without limitation trade secrets and intellectual property) which I became aware in the course of my employment with the Company.

1. I have returned to the Company all property in my possession, custody or control containing confidential information which I became aware of in the course of my employment with the Company, including but not limited to documents or records that are stored electronically and any computer hardware containing confidential information.

1. I undertake not to use or disclose any confidential information of the Company in my possession or knowledge, including:

• 3.1. in relation to the Company and its related bodies corporate and any of their strategy, clients or its products which I had access during my employment with the Company (other than information which is in the public domain); and

• 3.2. any hard copy documents, and electronic files, containing confidential information of the Company .

1. I undertake for the period until 24 August 2023 or the final determination of these proceedings in the Supreme Court (whichever occurs earlier) to not solicit, canvass, approach or accept any approach from the following clients in the Western Australian Solar Industry (as named at paragraph 29 of the affidavit of Mohamed Risham affirmed on 9 May 2023):

1. I undertake for the period until 24 February 2024 or the final determination of these proceedings in the Supreme Court (whichever occurs earlier) to not solicit, interfere with or endeavour to entice away from the Company any employee, contractor or consultant of the Company.

[Signed and dated by the first defendant on 16/05/2023]

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.

[10] Marsh affidavit attachment RM-6 cl 7.2 and sch 1.

[11] Marsh affidavit attachment RM-6 cl 9 and cl 10.

[12] Khouri affidavit attachments AK-2 and AK-3.

[15] Marsh affidavit [19] - [24]; Risham affidavit [42] - [43].

[17] Marsh affidavit [17] - [18] and attachment RM-8, RM-9 and RM-10.

[18] Marsh affidavit [25] and attachment RM-9.

[19] Marsh affidavit [25] and attachment RM-9.

[20] Marsh affidavit [27] and attachment RM-9 and RM-10.

[21] Marsh affidavit [27] and attachment RM-9 and RM-10.

[22] Marsh affidavit attachment RM-10 p 84, 85 and 87.

[30] Risham affidavit [27], [32] - [33].

[31] Risham affidavit [28] - [31]; Second Risham affidavit [5] - [8].

[32] Second Risham affidavit [9] - [13].

[34] Risham affidavit [47] - [53] and attachments MR-1 and MR-2.

[35] Risham affidavit [46], [63] - [66].

[36] Reed affidavit [3] - [7], [13] - [14].

[40] Reed affidavit [19] - [22]; second Risham affidavit [4].

[71] Second Risham affidavit [5] ‑ [6].

[72] Second Risham affidavit [8] ‑ [13].

[73] Second Risham affidavit [16] - [17].

[75] Second Risham affidavit [18] ‑ [19].

[76] Second Risham affidavit [21] ‑ [23].

[78] Second Risham affidavit [28] ‑ [30].

[79] Second Risham affidavit [31] ‑ [34].

[81] Second Risham affidavit [14] ‑ [15].

[82] Second Risham affidavit [35] ‑ [37].

[84] Second Risham affidavit [38] ‑ [39].

[85] Mineralogy Pty Ltd v Sino Iron Pty Ltd [2016] WASCA 105 [87] (Newnes JA) (McLure P & Corboy J agreeing). (citations omitted).

[86] Habitat 1 Pty Ltd v Formby [No 2] [2017] WASC 331 [36].

[87] Smith v Nomad Modular Building Pty Ltd [2007] WASCA 169.

[88] Smith v Nomad Modular Building Pty Ltd [35] ‑ [36].

[89] Sino Iron Pty Ltd v Mineralogy Pty Ltd [No 2] [2017] WASCA 76; (2017) 55 WAR 36.

[90] Twinside Pty Ltd v Venetian Nominees Pty Ltd [2008] WASC 110 [7] ‑ [12].

[91] Portal Software International Pty Ltd v Bodworth [2005] NSWSC 1179 [63].

[92] Emission Assessments Pty Ltd v James Jackson [2022] WASC 60 [63] ‑ [65] (citations omitted).

[93] Defendants' submissions [30] ‑ [31].

[96] Smith v Nomad Modular Building Pty Ltd [7].

[97] Workplace Access and Safety Pty Ltd v Mackie [2014] WASC 62 [40(3)]; Heydon J D, The Restraint of Trade Doctrine, 4th ed (2018) 48 ‑ 49 (and the authorities at footnote 98).

[98] Marsh affidavit attachment RM-6 cl 1.1 and sch 1.

[99] The contract variation refers to the position title of 'Lead Sales Manager' which Ms Marsh deposes was a title used interchangeably by OSW with the title 'Lead Account Manager' (Marsh affidavit [14]).

[100] Marsh affidavit attachment RM-7.

[101] See Heydon J D, The Restraint of Trade Doctrine, 4th ed (2018) 48 - 49 (and the authorities at footnote 98).

[102] Marsh affidavit attachment RM-6 cl 7.2 and sch 1.

[103] Marsh affidavit attachment RM-6 cl 9 and cl 10.

[104] Khouri affidavit attachments AK-2 and AK-3.

[105] Nutrien AG Solutions Ltd v Andrews [2023] WASC 96 [65].

[106] Second Kayarat affidavit [2] and Attachment KVK-3.

[107] Second Kayarat affidavit [3] and Attachment KVK-4.

[108] Second Kayarat affidavit and Second Craven affidavit.

[111] Second Risham affidavit [14] ‑ [15].

[112] Which was provided after the plaintiff's written submissions were filed.

[113] Khouri affidavit attachments AK-2 and AK-3.