Plaintiff v Defendant

Supreme Court of Victoria|2009-08-25|Before: HARGRAVE J

RESTRAINT OF TRADE - Application for interlocutory injunction - Whether void provisions of restraint clause should be severed - Interpretation of restraint clause - Relevant principles discussed.

1 This proceeding came on for hearing in the Practice Court. The plaintiff seeks interlocutory injunctions restraining the defendant, a previous employee, from soliciting its clients and employees. Affidavit material was filed on behalf of both parties. There was no cross-examination.

2 The plaintiff is a substantial company operating throughout Australia. It has 41 offices and more than 5,000 employees. Its gross revenue in Victoria is approximately $73 million per annum.

3 About 98 per cent of the plaintiff's business in Victoria is comprised of labour hire contracting. The plaintiff employs a work force which is provided to a range of industries. The plaintiff pays the workers' wages and all 'on costs' such as WorkCover, insurances, payroll tax and superannuation costs. The plaintiff adds a margin for its profit and then provides its employees to its industrial clients. The core industries which the plaintiff services in Victoria are warehousing, logistics and distribution, transport and manufacturing. The workers who are provided to the plaintiff's clients are principally blue-collar industrial workers, including general hands, storemen, forklift drivers, tradesmen and maintenance workers.

4 The defendant, Jane Dillon, commenced employment with the plaintiff in September 2007. She was employed at the plaintiff's Braeside office. Her principal responsibility was to recruit workers to form part of the plaintiff's labour pool, and to place those workers with the plaintiff's clients. Although Ms Dillon's principal dealings were with workers, she also dealt with representatives of the plaintiff's clients in connection with the placing of workers in their businesses. There is a dispute on the affidavit evidence as to the extent of Ms Dillon's involvement with client representatives during this phase of her employment by the plaintiff. That dispute cannot be resolved on an interlocutory application such as the present.

5 In March 2009, the plaintiff closed its Braeside office. Its operations from that office were transferred to its Dandenong office. Prior to that time, there had been some client sharing between the two offices.

6 At the time, the plaintiff's Braeside office was closed, most of the employees at that office were made redundant, including the branch manager, An Ngo.

7 Ms Dillon was not made redundant. She was promoted to the role of account manager at the plaintiff's Dandenong office. She was allocated an existing portfolio of clients. She had previously dealt with representatives of most of these clients in her role as a recruitment consultant at the Braeside office.

8 At the time she was promoted to account manager, Ms Dillon's salary package was altered. The plaintiff's general manager, Nicolas Fairbank, contended in his principal affidavit that Ms Dillon received a significant increase to her base salary, from $40,000 to $50,000. This was incorrect. Ms Dillon's base salary was at all times $50,000 plus superannuation. The only alteration to her pay at the time she was appointed an account manager was to replace an entitlement to 69 cents per kilometre for work-related travel in her own car with a flat entitlement of $10,000 per annum as a car allowance. The evidence does not enable a comparison to be made between the 69 cent per kilometre entitlement and the $10,000 per annum entitlement.

9 Further, at the time of Ms Dillon's appointment as an account manager of the plaintiff, she was asked to sign an employment agreement containing a number of restraint of trade provisions ('the restraint provisions'). I am satisfied that Ms Dillon had no realistic opportunity to negotiate the terms of the restraint provisions, which appear to be standard form provisions prepared by the plaintiff for the purpose of preventing employees competing against it after their employment ceases. Further, Ms Dillon signed the employment agreement in circumstances where large staff cuts were being made by the plaintiff due to the downturn in the economy. In these circumstances, she would have been foolhardy to seek to negotiate the form of the restraint provisions.

10 When appointed an account manager, Ms Dillon gained access to the plaintiff's 'FastTrack' system. The FastTrack system is used by the plaintiff to manage its recruitment and labour hire business. It includes complete details of all rates of pay for employees, statutory on-costs such as WorkCover, insurances, payroll and superannuation, and the plaintiff's charge rates, which constitute its profit. According to Mr Fairbank, Ms Dillon had a detailed knowledge of the relevant details in the FastTrack system for her clients. Further, the FastTrack system contains a complete history of the plaintiff's dealings with its clients. Ms Dillon acknowledges that she had access to the FastTrack system, but says that she cannot recall the details, including the profit margins charged by the plaintiff to individual clients. It was emphasised in submissions on her behalf that she was only employed as an account manager with access to the FastTrack system for about three months.

11 In her new role as account manager, Ms Dillon had increased contact with client representatives. There is a dispute on the affidavit material as to the extent of that contact, and as to the seniority of the client representatives with whom Ms Dillon dealt. The plaintiff contends in its affidavit material that Ms Dillon was the 'key interface' with clients, and that she dealt with client managers, supervisors and decision-makers. Ms Dillon swore that her dealings were with lower level employees of clients and that she did not deal with decision-makers. She swore that 70 per cent of her time continued to be occupied with the duties of her previous role as a recruitment officer. This dispute cannot be resolved on conflicting affidavits.

12 Ms Dillon occupied her position as account manager for a very short period. She took annual leave from 31 May 2009 and travelled in Western Australia. On 25 June 2009, shortly after she returned from leave, she resigned her position with the plaintiff as she had accepted a job with one of the plaintiff's competitors, OzStaff Pty Ltd. She commenced working for OzStaff on 9 July 2009 in the position of account manager. Ms Dillon has sworn that her role at OzStaff is substantially different to her account management role with the plaintiff. She says that her role with OzStaff is to service the needs of clients and that she is not responsible for soliciting new business.

13 Following Ms Dillon's resignation, Mr Fairbank met with her. Ms Dillon told him that she was resigning because OzStaff had made her an offer of greater remuneration. She said that Ms Ngo was also working for OzStaff. Mr Fairbank warned Ms Dillon of her obligations under the restraint provisions of her employment agreement. He swore in an affidavit:

I said to Ms Dillon that she should not make the mistake of thinking that we would not pursue her if she breached those obligations. Ms Dillon said that she would not do that.

14 Further, the plaintiff wrote to Ms Dillon reminding her of her restraint obligations and threatening legal proceedings if they were breached. A further copy of the employment contract was enclosed with the letter.

15 There is no dispute that OzStaff is a direct competitor of the plaintiff, particularly in the Dandenong area.

16 On 28 July 2009, OzStaff informed the plaintiff that, effective 28 July 2009, it would commence the supply of industrial and commercial recruitment services to two related companies, Blowflex Pty Ltd and Brickwood Holdings Pty Ltd. These companies were until that time clients of the plaintiff, and had been serviced by Ms Dillon in her capacity as an account manager of the plaintiff.

17 In the early morning of 28 July 2009, Ms Dillon attended the premises of Brickwood. She has sworn that her role on that morning was to provide administrative assistance in the induction of employees who were to transfer their employment from the plaintiff to OzStaff. As part of this process, she provided these workers with an induction booklet.

18 Ms Dillon has sworn that she had no involvement in the negotiations for Blowflex or Brickwood to commence dealing with OzStaff in lieu of the plaintiff. In support of this, she produced e-mail correspondence between OzStaff and Brickwood dated 2 June 2009, evidencing an offer by OzStaff (through Ms Ngo) to Brickwood and Blowflex to replace the plaintiff as the provider of labour services.

19 The plaintiff then consulted its solicitors. On 6 August 2009, its solicitors wrote to OzStaff and to Ms Dillon. The letter to Ms Dillon alleged that she was in breach of the restraint provisions and demanded that certain undertakings be signed and returned by Ms Dillon to the solicitors by close of business on the following day. The letter threatened that, in the absence of undertakings being provided by that time, proceedings for injunctive relief and damages would be commenced.

20 Following OzStaff's notice to the plaintiff that it was replacing it as the supplier of labour to Blowflex and Brickwood, Mr Fairbank spoke with the human resources manager of Blowflex and Brickwood, Mr Thomas. According to Mr Fairbank, Mr Thomas said words to the effect that Ms Ngo and Ms Dillon had offered him very good rates, which were significantly cheaper than those previously paid to the plaintiff. Mr Thomas did not swear an affidavit.

21 Another account manager of the plaintiff, Mr Bouchereau, also telephoned Mr Thomas. He was told that they had moved their business from the plaintiff to OzStaff because OzStaff offered cheaper rates and:

also the overall package, which he could not pass up. Mr Thomas said to me and I believe that Ms An Ngo had provided him with a package of blue collar, white collar and permanent recruitment services.

22 Ms Dillon denies that she has ever spoken with Mr Thomas, either in person or on the telephone.

23 As a result of the above matters, Mr Fairbank has sworn that he believes Ms Dillon was in fact involved in soliciting Brickwood and Blowflex to transfer their business to OzStaff and that he fears she will do the same with additional clients of the plaintiff. That concern is principally based upon Ms Dillon's personal relationships with senior staff of the plaintiff's clients, including those in a decision-making role, and Ms Dillon's knowledge from the FastTrack system of the plaintiff's pricing structure and margins. In those circumstances, he is concerned that Ms Dillon is well-placed to assist OzStaff to win clients from the plaintiff, particularly as it can pitch offers at levels which Ms Dillon knows will be unprofitable for the plaintiff. Further, he is concerned that Ms Dillon's relationships with the workforce employed by the plaintiff will enable her to use that familiarity to encourage them to move across to OzStaff if OzStaff is able to win business from the plaintiff.

24 Ms Dillon denies that she has engaged in any form of soliciting. She points to the fact that the arrangements for the transfer of the Brickwood and Blowflex business were commenced while she was on holidays in Western Australia, and the fact that she did no more than assist employees to transfer to OzStaff once agreement had been reached between OzStaff and Brickwood and Blowflex.

Is there a sufficient risk of breach of the restraint provisions to justify injunctive relief?

25 Counsel for both parties submitted that there were special principles to be applied in deciding whether to grant an interlocutory injunction which has the effect of enforcing a restraint of trade provision. It was submitted on behalf of Ms Dillon that the test as to whether a plaintiff has established a serious question to be tried is higher in such cases. Reliance was placed upon Monash Real Estate Ltd v Ross.[1] It was submitted on behalf of the plaintiff that, as an interlocutory injunction enforcing a restraint of trade provision will often have the effect of granting final relief, a plaintiff must establish 'a degree of likelihood that it will be successful at trial in obtaining a permanent injunction.' Reliance was placed upon Hartleys Ltd v Martin.[2]

26 I do not accept the submissions made by the parties in this regard. In Bradto Pty Ltd v State of Victoria,[3] the Court of Appeal (Maxwell P and Charles JA) rejected the notion that there is a special rule which applies to applications for interlocutory injunctions which will or may have the effect of providing final relief to a plaintiff.[4] In that case, the Court of Appeal stated that there was no special rule or sub-category of interlocutory injunctions which require different principles to be applied:

Once again, we see no necessity for the recognition of a special "rule" for this - different - sub-category of interlocutory injunctions. On the contrary, we think that it must be relevant on every application for an interlocutory injunction to consider the likelihood of the plaintiff succeeding at trial. Not only is such consideration a necessary part of deciding whether there is a serious question to be tried, but the plaintiff's prospects of success will almost always be a factor in the evaluation of the balance of convenience.[5]

27 Further, Bradto stands for the proposition that in considering whether to grant or refuse an application for an interlocutory injunction:

the court should take whichever course appears to carry the lower risk of injustice if it should turn out to have been "wrong", in the sense of granting an injunction to a party who fails to establish his right at the trial, or in failing to grant an injunction to a party who succeeds at trial.[6]

28 The likelihood of the plaintiff succeeding at trial depends, in the first instance, on the Court's view as to the enforceability of the restraint provisions upon which the plaintiff relies. If those restraint provisions are unlikely to be enforceable, the plaintiff's case for interlocutory relief will be substantially weakened.

29 I proceed to consider whether the restraint provisions relied upon by the plaintiff are reasonably necessary in the circumstances of the case and thus enforceable.

30 The restraint clauses contained in the employment agreement are in the following terms:

POST EMPLOYMENT RESTRAINT

The Employee will not, without the prior written consent of the Company, for a period of:

12 months, or if this period is held to be unenforceable by a court;
6 months, or if this period is held to be unenforceable by a court; or
3 months.

after cessation or termination of any Employment Contract between the Company and the Employee:

Solicit clients, business and patronage of the Company;
Canvass, induce, encourage or solicit any employee or agent of the Company with whom the Employee had contact during the course of the Employee's employment, to leave the employment or agency of the Company.

The Employee will not, without the prior written consent of the Company, within:

All regions within Australia for which the Employee had responsibility, or if this area is held be to[o] broad by a court;
The State or Territory of Australia in which the Employee maintained his/her princip[al] business office, or if this area is held to be to[o] broad by a court;
The city or town in which the Employee maintained his/her princip[al] business office.

after cessation or termination of any Employment Contract between the Company and the Employee:

Provide or be involved with the provision of any service competitive with any service provided by the Company, calculated to divert, entice or take away clients, business or patronage or attempt to do so;
Directly or indirectly, whether on the Employee's own account or for any other person, firm, corporation, association, trust, joint venture, syndicate or enterprise, compete or seek to compete with the Company or prejudicially interfere with the relationship between the Company and its clients or contacts.

The parties agree that each separate covenant and restraint in this Deed is reasonable and that each party approves its drafting.

The parties agree that the word 'involved' will be given the widest possible interpretation and will include management without salary, advising or influencing a competitive business on a continuing basis whether for direct remuneration or benefit or otherwise, or establishing or being interested in or influencing a competitive business through any association or arrangement with any person, relative, nominee or trust in or over which any interest or influence (absolute or partial) is held.

The Employee acknowledges that the Company has the right to enforce this Deed and any of its provisions by injunction, specific performance or other equitable relief, without bond, without prejudice to any other rights and remedies that the Company may have for a breach of this Deed, and the Employee waives the claim or defen[ce] that the Company has an adequate remedy at law.

SEVERABILITY

Any provision of this Deed which is prohibited or unenforceable in any jurisdiction will be ineffective in that jurisdiction to the extent of the prohibition or unenforceability. That will not invalidate the remaining provisions of this Deed or affect the validity or enforceability of that provision in any other jurisdiction.

31 The employment agreement contains a number of relevant definitions, as follows:

Client means the customers of the Protected Business with whom the Employee:

maintained a direct business relationship;
managed either directly or indirectly [with] other employees of the Company who maintained a business relationship; or
has been introduced to by any other employee of the Company whilst performing the responsibilities of his/her role,

as at, and following, the commencement date.

...

Company means Integrated Group Limited (ABN: 29 085 701 962) and includes each of its Related Bodies Corporate.

...

Protected Business means each business carried on by any member of the Company from the date the Employee commences employment with the Company.

Related Body Corporate means, in relation to a body corporate, a body corporate which is related to it within the meaning of section 50 of the Corporations Act.

32 The relevant principles to be applied are not controversial. The prima facie position is that an express restraint of trade clause in an employment agreement is void, as contrary to public policy. However, a restraint of trade clause will be enforceable if it is reasonable in all the circumstances. The classic test is 'whether the restraint is such only as to afford a fair protection to the interests of the party in favour of whom it is given, and not so large as to interfere with the interests of the public'.[7]

33 In determining whether a restraint of trade clause offers reasonable and fair protection to an employer, a number of factors are taken into account. These include the nature of the employer's business; the nature of the employee's position; whether the employee has had access to confidential information of the employer; the relationship of the employee with clients and other employees of the business; the duration of the employment; the extent of the consideration provided by the employer for the restraint; the length of time that an employer will need to replace a departing employee; and the likely duration of a former employee's personal relationship with customers of the employer.

34 It is often the case that employment agreements contain restraint of trade clauses which are a mixture of reasonable and unreasonable restraints. Employers often attempt to state restraints of trade in a series of several distinct covenants of varying degrees of reasonableness, and then rely upon principles of severance to disclaim any unreasonable restraints of trade when the matter comes before a court. In the meantime, the employee is faced with a series of reasonable and unreasonable covenants and, when the employment is terminated, often threatened with legal action if any of those covenants are breached. This is such a case.

35 There are a number of examples in the reported cases of the courts looking askance at employers seeking to disclaim obviously unreasonable terms and to sever out reasonable terms in restraint provisions contained in the relevant employment contract. The cases were reviewed by Dodds-Streeton J (as she then was) in I.F. Asia Pacific Pty Ltd v Galbally.[8] In that case, Dodds-Streeton J accepted that there is 'a strictly circumscribed role for severance in the context of employee restraint covenants.'[9] Her Honour described the accepted approach to severance in a restraint of trade context as a 'narrow approach'. In doing so, her Honour accepted the classic statement by Younger LJ in Attwood v Lamont.[10] Younger LJ expressed the narrow approach in the following way:

The learned judges of the Divisional Court, I think, took the view that ... severance always was permissible when it could be effectively accomplished by the action of a blue pencil. I do not agree. The doctrine of severance has not, I think, gone further than to make it permissible in a case where the covenant is not really a single covenant but is in effect a combination of several distinct covenants. In that case and where the severance can be carried out without the addition or alteration of a word, it is permissible. But in that case only.[11]

36 The covenant in Attwood v Lamont sought to restrain the employee being in any way concerned in any of the trades or businesses conducted by the employer, being 'the trade or business of a tailor, dressmaker, general draper, milliner, hatter, haberdasher, gentlemen's, ladies' or children's outfitter'. This was a description of all of the businesses conducted by the employer. However, the employee did not work in all of those businesses. He worked only in the tailoring department. In these circumstances, the employer sought to have the court sever from the restraint clause all reference to trades or businesses other than that of a tailor. The Divisional Court agreed that this could be done by a process of severance. The Court of Appeal allowed the appeal. As a matter of construction of the restraint clause, it was held that there was 'in truth but one covenant for the protection of the respondent's entire business, and not several covenants for the protection of his several businesses'.[12] In reaching this conclusion, and insisting upon a narrow approach to severance in the context of restraint of trade clauses, Younger LJ referred to the statement of Lord Moulton in Mason's Case that severance:

ought only to be done in cases where the part so enforceable is clearly severable, and even so only in cases where the excess is of trivial importance, or merely technical, and not a part of the main purport and substance of the clause. It would in my opinion be pessimi exempli if, when an employer had extracted a covenant deliberately framed in unreasonably wide terms, the Courts were to come to his assistance and, by applying their ingenuity and knowledge of the law, carve out of this void covenant the maximum of what he might validly have required. It must be remembered that the real sanction at the back of these covenants is the terror and expense of litigation, in which the servant is usually at a great disadvantage, in view of the longer purse of his master.[13]

37 In I.F. Asia Pacific v Galbally,[14] Dodds-Streeton J echoed Lord Moulton's words in determining that severance was not appropriate in the case before her. Her Honour stated that the narrow approach propounded by Younger LJ in Attwood v Lamont:

cautions against curial disentanglement of unreasonably wide clauses, recognising that they may act in terrorem by exposing employees to the threat of litigation. Undue judicial readiness to save such clauses by severance reduces the sanction of invalidity otherwise applicable to employers who attempt to impose unjustifiably wide restraints.[15]

38 In I.F. Asia Pacific v Galbally, the extension of the restraint to clients of the employer's related corporations was held not justifiable.[16]

39 In this case, the plaintiff seeks to rely upon only part of the restraint provisions insisted upon by it in the employment agreement, and which formed the subject of the warnings given to Ms Dillon when she left her employment. As appears above, Ms Dillon was simply reminded of the whole of the restraint provisions, given a copy of them, and told that if she did not honour them she would be liable to proceedings for injunctions and damages.

40 The plaintiff relies upon the part of the restraint provisions which provides that, for the cascading periods of 12, 6 and 3 months respectively, Ms Dillon will not:

Solicit clients, business and patronage of the Company;
Canvass, induce, encourage or solicit any employee or agent of the Company with whom the Employee had contact during the course of the Employee's employment, to leave the employment or agency of the Company.

41 No attempt is made by the plaintiff to rely upon the remainder of the restraint provisions. It would have been hopeless for the plaintiff to attempt to justify their reasonableness. The remainder of the restraint provisions seek to restrain Ms Dillon from competing with the plaintiff on her own account or from being employed by a competitor. However, I accept that the restraint provisions which are relied upon are, even on the narrow test for severance, obviously separate covenants which can be severed. The question remains as to whether the restraint provisions relied upon provide a reasonable and fair protection to the plaintiff in the circumstances of this case.

42 The words 'solicit clients, business and patronage of the Company' create an immediate difficulty for the plaintiff. Although 'client' is a defined term with some in-built restrictions, there is no definition of 'business' or 'patronage' in the employment agreement. Accordingly, business and patronage of the company, includes business and patronage of the plaintiff and any related corporation. The evidence establishes that the plaintiff's related corporations trade throughout Australia and overseas and that they conduct business in industries other than labour hire, including businesses as diverse as marine and engineering services. It was conceded that a covenant restraining Ms Dillon from soliciting 'business and patronage' of the plaintiff's related companies would be an unreasonable restraint of trade.

43 It was submitted on behalf of the plaintiff that the restraint upon soliciting 'clients, business and patronage of the Company' involves the use of a compendious expression in which the words 'business and patronage of the Company' add nothing to the prohibition against soliciting clients. Counsel emphasised that 'client' is defined in terms containing an in-built restriction to customers of the plaintiff, or its related corporations, with whom Ms Dillon 'maintained a direct business relationship'. Although senior counsel for the plaintiff did not accept it, this submission requires the words to be treated as redundant and ignored.

44 In my opinion, reading the restraint provisions as a whole, it is apparent that the words 'business and patronage of the Company' were intended to expand the restraint beyond soliciting clients (as defined). There are a number of reasons why I am of this opinion.

45 First, the definition of 'client' is detailed and extensive. The definition renders the words 'of the Company' otiose when referring to clients. This is because any customer of the 'Protected Business' must be a customer of the company which, in turn, is defined to include related companies.

46 Second, when read as a whole, the restraint provisions and definitions reveal an intention to include unreasonable restraints by the use of broad language. For example, the definitions of 'Company', 'Protected Business' and 'involved'.

47 Third, there is a presumption, albeit rebuttable, against treating words in an agreement as redundant unless the purpose of the agreement indicates that the words were unlikely to have been intended to have meaning.[17] Although this presumption has been criticised as being of reduced value in cases of 'torrential' drafting, where the draftsman is obviously intending to broaden the scope of the provision in question so as to include all possibilities,[18] the presumption should be given effect in this case. In my view, where a restraint of trade provision is concerned, the Court should be reluctant to treat as redundant words which, if operative, create an unreasonable restraint of trade. Such an approach is consistent with the narrow approach adopted by the Court when considering severance issues in restraint of trade provisions.

48 An alternative argument was put forward on behalf of the plaintiff. It was submitted that the words 'business and patronage' could be severed from the relevant restraint provisions. Although it was not stated in argument, this alternative submission probably requires the words to be read as if the conjunction 'and' were replaced with the conjunction 'or', so that the relevant provision should be construed as preventing solicitation of 'clients, business or patronage of the Company'. It may be that the use of the conjunction 'and' is an obvious mistake, and 'or' was intended.[19] Such an interpretation of the words may be supported by the use of the phrase 'business or patronage of the Company' in the obviously unreasonable restraints against any competition by Ms Dillon with the plaintiff.

49 In my opinion, whether or not the word 'or' had been intended, this is not a case where the Court should sever the offending words. Whichever way the words are read, they were intended to protect all businesses conducted by the plaintiff or its related corporations.[20] Such a restraint would obviously be unnecessary and unenforceable on the facts of this case.

50 This aspect of the case was the subject of detailed submissions, both written and oral, from experienced counsel for both parties. It is unlikely that the arguments will differ at trial. In these circumstances, I conclude that it is highly unlikely the plaintiff will succeed at trial in establishing that the restraint against soliciting clients, business and patronage of the Company is enforceable against Ms Dillon.

51 I turn to consider the second aspect of the restraint provisions relied upon. An employer has a strong interest in preserving its relationship with employees. In this case, the employees concerned include both employees in the management and administration side of the plaintiff's business and the blue-collar workers who are provided to clients. Accordingly, in order to protect its legitimate business interest in maintaining the employment of its workforce, it was in my opinion reasonable for the plaintiff to restrain Ms Dillon from seeking to induce employees with whom she had formed a relationship during the course of her employment with the plaintiff from leaving the plaintiff's employ.

52 It was submitted on behalf of Ms Dillon that the form of the restraint was unreasonably wide, because it prevents Ms Dillon from encouraging any employee with whom she 'had contact' during the course of her employment to leave the plaintiff's employ. It was submitted that the mere fact that Ms Dillon may have had brief incidental contact with some employees would not give her any particular 'sway' to influence those employees to leave. I do not accept that submission. The words 'had contact' should be read in a sensible way, to include direct proximity or association in the course of Ms Dillon's employment. Such an interpretation gives the word 'contact' its ordinary meaning.[21]

53 However, I do not accept that a period of 12 months is a reasonable protection. In my view, a period of six months only is reasonable and necessary in all of the circumstances. By then, the plaintiff will have had ample time to consult all of the employees with whom Ms Dillon had contact, and assure them that they remain valuable employees, if that is the case. Further, after a period of six months, any 'sway' which Ms Dillon may have had over her co-workers or the blue-collar employees whom she managed is likely to have diminished.

54 Accordingly, I conclude that there is a sufficient likelihood that the plaintiff will succeed in establishing at trial that the restraint preventing Ms Dillon from inducing the plaintiff's employees to leave their employ is an enforceable restraint.

55 I will consider the balance of convenience and risk of injustice by reference to the two aspects of the restraint provisions considered above.

56 In respect of the restraint against soliciting clients, it will be apparent from what appears above that I view the plaintiff as having weak prospects of establishing an enforceable restraint. It was submitted on behalf of the plaintiff that, even if the Court took this view, there would be no harm in ordering a restraint in circumstances where Ms Dillon has sworn that her role with OzStaff does not include soliciting clients. I do not accept this submission. An injunction should not be granted simply because a defendant says they have no intention of breaching it. This is especially so when the form of the injunction sought is of wide import, as here. The plaintiff sought an injunction which would have prevented Ms Dillon from 'directly or indirectly' soliciting clients.

57 Further, Ms Dillon has undertaken to the plaintiff that, for a period of six months after the cessation of her employment by the plaintiff, she will not approach any of the Protected Clients of the plaintiff with a request that they move their business from the plaintiff to OzStaff. The giving of this undertaking weighs in her favour when considering the balance of convenience.

58 The position concerning injunctive relief in connection with the restraint against inducing the plaintiff's employees to leave their employ is different. For the reasons given above, there is a serious question to be tried as to whether this aspect of the restraint provisions is enforceable. However, for the reasons appearing below, I refuse injunctive relief.

59 First, as appears above, I think it is unlikely that a restraint provision of more than six months after employment is reasonable and necessary.

60 Second, Ms Dillon has given an undertaking to the plaintiff that she will not, for a six month period after cessation of her employment, directly approach any employee or agent of the plaintiff with a request that they become an employee or agent of OzStaff. Although solicitation by one person of another may in rare cases take place when the other person makes the first approach,[22] it seems to me that this undertaking is sufficient in all the circumstances to provide the plaintiff with adequate protection. It is highly likely that any attempt by Ms Dillon to canvass, induce, encourage or solicit any of the plaintiff's employees to leave their employment would be by direct approach initiated by her. There is no suggestion of a risk that Ms Dillon will attempt to breach this restraint provision in any other way than assisting her current employer.

61 Third, I am not satisfied that the evidence establishes a sufficient risk that Ms Dillon will breach this aspect of the restraint provisions. Although Mr Bouchereau spoke with a number of the Brickwood and Blowflex workers who have transferred their employment to OzStaff, none of them indicated that Ms Dillon had sought to induce them to transfer.

62 For the above reasons, the application for injunctive relief will be refused.

[2] [2002] VSC 301, [36] and [39].

[7] Nordenfelt v Maxim Nordenfelt Guns & Ammunition Company [1894] AC 535, 549.

[17] Lewison, The Interpretation of Contracts (4th Ed), [7.03].

[19] See, for example, Fitzgerald v Masters [1956] HCA 53; (1956) 95 CLR 420, 426-7.

[20] Cf Attwood v Lamont [1920] 1 KB 571, 593.

[21] See, for example, The Macquarie Dictionary which, relevantly, defines contact as 'immediate proximity or association.'

[22] Barrett v Ecco Personnel Pty Ltd [1998] NSWSC 545.

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Judgment (97 paragraphs)

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Cases Cited (1)