Steadfast IRS Pty Limited v Latchmi Mesuria

Supreme Court of NSW|2020-06-24|Before: Sackar J

: Steadfast IRS Pty Limited (plaintiff) Latchmi Mesuria (defendant) Representation: Counsel: D Mahendra (plaintiff) C Cassimatis (defendant)

Solicitors: Sparke Helmore (plaintiff) Petrine Costigan Lawyers File Number(s): 2020/75330

The Proceedings:

There are three principal questions before the court.
The first is whether the conduct of the plaintiff amounts to a repudiation of the contract of employment that existed between plaintiff and defendant.
Secondly, if the answer to the first question is "yes", is the plaintiff prevented from enforcing the post-employment restraints contained in the contract?

Background

The plaintiff is part of a broader organisation (the Network Insurance Group). The Network Insurance Group is majority owned by Steadfast Group Limited (Steadfast Group) and is the largest insurance broker network and underwriting agency group in Australasia.
The defendant was originally employed on 20 November 1998 as an Account Broker by a separate entity (Indemnity Corporation) which was acquired by the Steadfast Group in 2013.
As a result, the defendant had her employment transferred to the plaintiff.
On 11 May 2016, the defendant signed the Employment Contract which is stated to have been "made on 1st July 2016" between Steadfast and the defendant (TB.17).
The defendant later signed an updated schedule to the Employment Contract setting out changes to her employment which took effect on 1 October 2017.
At the time the defendant's contract ended with the plaintiff on 26 September 2019, her total remuneration package was $152,250 per annum and included a $6000 per annum motor vehicle allowance.
It is uncontroversial that the primary focus of the defendant's role was to manage relationships with clients of the plaintiff, selling the products and services offered by it to new and existing clients. In respect to the clients the defendant dealt with, she was seen as the representative of the plaintiff.
There is a dispute in the proceedings as to what responsibilities the defendant had from time to time and, for example, to whom she reported to and who reported to her.
In late 2018, Mr Broughton (CEO of the Network Insurance Group) and Mr Farr (Chief General Manager of the Network Insurance Group) sought to develop the various smaller businesses that had been acquired by the Network Insurance Group (including the plaintiff) into a single national business.
Again, there is a dispute as to the circumstances which led to the defendant relocating to Melbourne. The plaintiff's case is that the defendant requested the move. The defendant asserts she was directed to relocate there.
The defendant relocated to the Melbourne office of the plaintiff on 6 May 2019.
Between 6 May 2019 and July 2019, the defendant performed the duties and responsibilities required of her position and reported to either Ms Forbes and/or Mr Broughton.
In July 2019, the defendant requested time off work, which was not approved.
On Friday 26 July 2019, it was announced that a new operating structure for the Network Insurance Group was being implemented. The restructure was intended to consolidate and streamline a number of different businesses under the one umbrella and to clarify reporting lines. As a result of a merger of businesses over the years there were a number of different employees working in the same or similar roles but having different job titles.
The plaintiff accepts that as a result of the defendant relocating to Melbourne her reporting lines had changed but says the restructure made no further change to her reporting lines. The plaintiff asserts that, while the defendant's job title changed, her role remained the same as far as her duties and responsibilities were concerned. There was also no change to her remuneration.
The defendant did not attend work on Monday 29 July 2019 and did not return to work and thereafter remained on sick leave until the cessation of her employment.
During August, she complained about the fact she asserted, that she had been demoted, had only limited assistance and was medically unfit to work as a result of the stress caused by the changes to her work arrangements.
The plaintiff, following exchanges of emails, meetings and solicitors' letters, denied that it had repudiated the contract with the defendant. Instead, it treated her employment as having come to an end on 26 September 2019, which is when the defendant's solicitors wrote to Steadfast asserting that it had repudiated the Employment Contract.
The plaintiff has made clear that it does not seek to prevent the defendant from working or competing with the plaintiff. It merely seeks to enforce cl.5.5.2(a), the non-solicitation clause. The plaintiff also accepted that if it has repudiated the contract it would be unable to enforce the relevant restraint.

The terms of the Employment Contract

Clause 2 of the Employment Contract addresses the defendant's obligations while she was employed by the plaintiff. She was employed full time (clause 2.1.1.; Item E of the updated Schedule).
Clause 2.1.2. states that: Unless the Employer otherwise agrees, if the Employee is employed as a full time or part time employee, the Employee will work solely for the Employer to the exclusion of any other business, trade or activity which is or is likely to be competitive with the Employer or its Related Companies or is likely to cause a conflict of interest with the Employer. Any potential conflict of interest must be declared to the Employer.
Clause 2.4 provides: 2.4.1. The Employee may be directed by the Employer or the Employee's immediate Manager/Supervisor to carry out such duties consistent with the Employee's skill and training. The specific responsibilities and duties of each Employee are set out in the Employee's offer of employment and the Employee's Position description. 2.4.2. The Employee may be required to perform other tasks which are not included in the Employee's Position Description that are reasonably connected with, or incidental to, the position. 2.4.3. The Employee may be required to perform some of the Employee's duties on behalf of a Related Company without further remuneration unless otherwise agreed by the Employer. …
The Position Description (dated 1 July 2016), which applied at the date of the Employment Contract (1 July 2016) and when the defendant signed the updated Schedule (which took effect from 1 October 2017), included the following: 1. Position Title: Account Director (see also Item A of the updated Schedule); 2. Division: North Ryde Office 3. Direct reports: Nelson Pamute - Account Executive; 4. Reports to: Mark Wiseman - General Manager, Corporate Broking (although a handwritten amendment to the updated Schedule indicates that the defendant's immediate manager was Adam Farr); 5. Position Summary: Contribute to business growth objectives of Steadfast IRS Pty Limited, by development of new business and retention of existing business, specifically in nominated accounts within the nominated Broking division; 6. Key responsibilities - Business Retention: 7. Management of a portfolio with particular emphasis on profitable growth 8. Contribute to business retention activities, including: 9. Maintaining client relationships: … establishing and maintaining effective working relationships with the Insured and other individuals working within the Insurance market 10. Policy renewal: … effectively plan renewal activity; liaise with other brokers re renewal of clients' policies 11. Key Responsibilities - Business Development: 12. … Identification and development of new business prospects by cross-marketing keeping abreast of changes in the market place 13. Contribute to new business activities including: … conduct personal visits and contact by telephone of prospective clients 14. … Staff management: ensure day to day activities are carried out in accordance with the Company's guidelines and procedures; conducting performance appraisals for your team that report to you and within the Company's guidelines and procedures; manage the work effect of your team to achieve agreed objectives for business development and retention; acquire and maintain an appropriate level of leadership skills in order to lead and motivate your team to achieve their personal potential, and enhance their career advancement prospects
The defendant's Base Salary is provided for in clause 3.1.1. and Item F of the updated Schedule, the Base Annual Salary being $133,000.00 and Gross Annual Salary (inclusive of superannuation and the motor vehicle allowance) being $152,205.00. The Base Salary "is intended to exceed all entitlements under the law or any applicable industrial award or agreement that may apply to the Employee's employment" (clause 3.1.2.) and the Employer "may, at its sole discretion, elect to increase the Base Salary" (clause 3.1.3.). Any increase to the Base Salary "will be agreed in writing by the Employer" (clause 3.1.4.).
With respect to termination, clause 5 states: 5. Termination 5.1.1. The Employee or the Employer may terminate the Employee's contract of employment for any reason by providing the other party with the relevant period of written notice below: 5.1.2. Account Directors and Account Managers are required to give the Employer 6 weeks notices to terminate their employment … 5.1.4. An additional period of one week's notice of termination will apply to the Employee if he or she has been continuously employed by the Employer for 2 years and is over 45 years od age at the time that notice of termination is given. …
Then, clause 5.5.2., the non-solicitation restraint, relevantly provides that: The Employee must not and must not counsel, procure or otherwise assist any person or entity to do any of the following during the Restraint Period: (a) Clients: solicit or persuade a Client to stop or reduce its business with the Employer; (b) Employment: induce or attempt to induce an employee, contractor, officer or agent of the Employer to terminate his or her employment or relationship with the Employer; (c) Suppliers: solicit or persuade a supplier to stop or reduce its business with the Employer.
The "Restraint Period" is defined in the updated Schedule to the Employment Contract to mean: (a) 12 months after the end of the Employee's employment; or, if that is not enforceable, (b) 9 months after the end of the Employee's employment; or, if that is not enforceable, (c) 6 months after the end of the Employee's employment; or, if that is not enforceable; (d) 3 months after the end of the Employee's employment.
"Client" is defined in clause 1 to mean: any person, firm or company who were clients of the Employer or a Related Company during the last 12 months of the Employee's employment and who the Employee had contact with in connection with providing insurance services; and any person, firm or company who were clients of the Employer or a Related Company during the last 12 months of the Employee's employment and for whom the Employee has, or would have been reasonably likely to have had, knowledge of the manner in which the client was serviced by the Employer or a Related Company.
"Related Company" is said to mean "any body corporate which is related to or associated with the Employer within the meaning given by section 50AAA of the Corporations Act 2001 (Cth)" (clause 1).
The non-compete restraint is contained in clause 5.5.1., which states: The Employee must not during the employment and from the End Date for the Restraint Period be employed by or engaged, concerned or interested in; (a) Any business with whom the Employee had work related dealings during the 6 months preceding the End Date to terminate their employment with the Employer, whether or not that person would commit a breach of that person's contract of employment and (b) any business that: (i) provides Insurance Broking, Agency or Consulting services, Risk Management, Loss Prevention or other related insurance services; and (ii) competes with the business of the Employer
"End date" is defined to mean "the date that the Employee ceases to be an employee of the Employer" (clause 5.5.7.).
Clauses 5.5.3.-5.5.6. provide, inter alia, that: 5.5.3. Acknowledgement The Employee acknowledges each of the following: (a) the restrictions in the previous clauses are reasonable in their extent and duration; and (b) they are no more than necessary to protect the business interests of the Employer; and (c) they do not unreasonably restrict the Employee's right to practise in the Employee's profession. 5.5.4. Restrictions reasonable and independent The Employee agrees that: ... (b) the restraints contained in this clause are reasonable, in the context of the employment, the industry and the period and the geographic nature of the restraints, to protect the Confidential Information and legitimate business interests of the Employer; (c) the Employee intends the restrictions to operate to the maximum extent; ... (g) the restrictions contained in this Agreement are separate, distinct and severable, so that if a court of competent jurisdiction decides any such restraint to be unenforceable in whole or in part, the enforceability of the remainder of that restraint and any other restraint will not be affected. 5.5.5. Modification of restrictions If these restrictions: (a) are void as unreasonable for the protection of the Employer's business interests; and (b) would be valid if part of the wording was deleted or the period or area was reduced, then the restrictions will apply with the modifications necessary to make them effective. 5.5.6. Longest and widest is applicable If there is any inconsistency or contradiction between several prohibitions or restraints which are not invalid or unenforceable, the prohibition or restraint with the longest Restraint Period to the exclusion of any other prohibition or restraint, constitutes the prohibition or restraint agreed by the Parties.
Clause 5.6. concerns the use of Confidential information: 5.6.1. The Employee shall not either during or after the employment use, divulge or communicate any Confidential Information to any person without the consent of the Employer, except for the benefit of the Employer and as required in the ordinary performance of the Employee's duties. … 5.6.3. The Employee agrees that: (a) the Employee will obtain Confidential Information during their employment, the disclosure of which could materially harm the Employer …
Pursuant to clause 7.1, clauses 5.4, 5.5 and 5.6 of the Employment Contract "shall survive the termination of the Employee's employment with the Employer and the termination or expiry of this agreement".

Legal Principles

Whether there has or has not been a repudiation will depend on the facts in any particular case and it is not to be inferred lightly - it is a serious matter because the effect of it is to give the other party to the contract the right to terminate it.
What can be said, however, is conduct must be objectively identified as amounting to conduct which is "substantially inconsistent" with the plaintiff's obligations. It must amount to a renunciation of the plaintiff's obligations, either of the contract as a whole or a fundamental obligation under it: see Shevill v Builders Licensing Board (1982) 149 CLR 620, 625-627 (per Gibbs CJ, with whom Brennan J agreed); Laurinda Pty Ltd v Capalaba Park Shopping Centre Pty Ltd (1989) 166 CLR 623, 647-648 (per Brennan J), 657-658 (per Deane and Dawson JJ); see also Keays v JP Morgan Administrative Services Ltd [2012] FCAFC 100.
In the employment context, it is common for the duties and responsibilities of employees to change from time to time with or without a change in remuneration. Careful attention must be paid to the facts in each case to ensure the relevant objective test is met. The issue falls to be determined at the time the party elects to treat the other party's conduct as repudiation: see Easling v Mahoney Insurance Brokers (2001) 78 SASR 489; Cameron v Asciano Services Limited [2011] VSC 36 at [44]-[46] (per Beach J).
The principles relevant to the validity of restraint of trade clauses are now well settled. At common law, a restraint of trade clause is contrary to public policy and void unless it can be shown that the restraint is in all the circumstances of the particular case reasonable (Nordenfelt v Maxim Nordenfelt Guns and Ammunition Co Ltd [1894] AC 535, 565 ('Nordenfelt'); Amoco Australia Pty Ltd v Rocca Bros Motor Engineering Co Pty Ltd (1973) 133 CLR 288, 315). The onus at common law of showing that the restraint goes no further than is reasonably necessary to protect the interests of the person in whose favour the restraint operates lies on the party seeking to support the restraint as reasonable (Adamson v New South Wales Rugby League Limited (1981) 27 FCR 535, 554 per Hill J).
The position in New South Wales must be viewed in the light of the Restraints of Trade Act 1976 (NSW) s 4(1). The effect of the Act is to allow the restraint to be read down so as to be valid to the extent necessary only to capture the conduct of the offending party, if a restraint to that extent would have been valid.
Therefore, in New South Wales the approach is first to determine whether the offending conduct comes within the clause properly construed. Then to determine whether the restraint in its application to that breach is against public policy, and lastly, if it is not, the restraint is valid, although the court is empowered to make an order under s 4(3) of the Act (see Orton v Melman (1981) 1 NSWLR 583, 587; Woolworths Ltd v Olson [2004] NSWCA 372 at [42] ('Olson')).
The validity and reasonableness of the restraint is to be determined as at the time it is entered (see Portal Software v Bodsworth [2005] NSWSC 1179, citing, inter alia, Nordenfelt, 574; Olson at [40]). However, when exercising its discretion to grant relief, the court considers matters as at the date of the hearing, including matters pertaining to the defendant (see Otis Elevator Company Pty Limited v John Nolan [2007] NSWSC 593 at [17]-[30] ('Otis Elevator Company'); and John Fairfax Publications Pty Ltd v Birt [2006] NSWSC 995 at [45]-[46]).
These principles were recently summarised and confirmed by Gleeson JA (with whom Bathurst CJ and Beazley P agreed) in Izaac v Dargan Financial Pty Ltd (2018) 98 NSWLR 343 at [59]-[72]: [59] At common law a restraint of trade is contrary to public policy and void unless justified by the special circumstances of the particular case. A restraint may be enforced if the restraint is reasonably necessary for the protection of the parties concerned and reasonable in the interests of the public: Nordenfelt v The Maxim Nordenfelt Guns and Ammunition Company Ltd [1894] AC 535 at 565 (Lord Macnaghten); Lindner v Murdock's Garage (1950) 83 CLR 628 at 633 (Latham CJ); [1950] HCA 48; Buckley v Tutty (1971) 125 CLR 353 at 376, 379-380; [1971] HCA 71. [60] In New South Wales, it is necessary to have regard to the Restraints of Trade Act 1976 (NSW) … [61] The correct approach to the application of s 4(1) of the Restraints of Trade Act is well settled. In Orton v Melman [1981] 1 NSWLR 583 at 587 McLelland J (as his Honour then was) explained that first, the court determines whether the alleged breach (independently of public policy considerations) does or will infringe the terms of the restraint properly construed. Next, the court determines whether the restraint, so far as it applies to that breach, is contrary to public policy. If it is not, the restraint is valid, subject to any order which may be made under s 4(3)… [62] The effect of s 4(1) of the Restraints of Trade Act is to require, for the purpose of determining the validity of a restraint, that attention be focused on the actual or apprehended breach, rather than on imaginary or potential breaches: Cactus Imaging Pty Ltd v Peters (2006) 71 NSWLR 9; [2006] NSWSC 717 at [10] (Brereton J). [63] The validity of a covenant in restraint of trade is to be judged at the date of its creation: Lindner v Murdock's Garage at 653 (Kitto J); Amoco Australia Pty Ltd v Rocca Bros Motor Engineering Co Pty Ltd (1973) 133 CLR 288 at 318 (Gibbs J); [1973] HCA 40; Geraghty v Minter (1979) 142 CLR 177 at 181 (Barwick CJ); [1979] HCA 42. Nonetheless, the court may take into account future events that could have been foreseen: Lindner v Murdock's Garage at 653. Hence, when exercising its discretion whether or not to grant relief, the court considers matters as at the date of the hearing: Sidameneo (No 456) Pty Ltd v Alexander [2011] NSWCA 418 at [70] (Young JA; Beazley and Basten JJA agreeing); Tullett Prebon (Australia) Pty Ltd v Purcell (2008) 175 IR 414 at 440; [2008] NSWSC 852 at [88] (Brereton J). [64] The nature of the interest meriting protection under a covenant in restraint of trade will differ according to the type of restraint under consideration. In Tullett Prebon (Australia) Pty Ltd v Purcell, a case involving restraints in an employment case, Brereton J said at [47]: "[47] … Whether a restraint is reasonable having regard to the interests of the parties depends on two, albeit related, considerations: first, whether the covenantee has a legitimate protectable interest, and secondly, whether the restraint is no more than reasonable for the legitimate protection of that interest. A covenantee is not entitled to be protected against mere competition; the legitimate interests which may be the subject of protection by covenant are in the nature of proprietary subject matter [Vandervell Products Ltd v McLeod [1957] RPC 185; Tank Lining Corp v Dunlop Industries Ltd (1982) 40 OR (2d) 219; 140 DLR (3d) 659 at 664], including trade secrets and confidential information, and goodwill including customer connection." [65] However as Young JA explained in Sidameneo (No 456) Pty Ltd v Alexander at [31]-[32], the word "proprietary" is used in a special sense and will include legitimate commercial interests. In this regard, his Honour referred to the view he had expressed in Twenty-First Australia Inc v Shade (Supreme Court (NSW), Young J, 31 July 1998, unrep) and Stokely-Van Camp Inc v New Generation Beverages Pty Ltd (1998) 44 NSWLR 607 at 612-613. [66] "Goodwill" has been described as a rather elusive concept: Sidameneo (No 456) Pty Ltd v Alexander at [54]. Goodwill has been referred to as the product of combining and using the tangible, intangible and human assets of a business for such purposes and in such ways that custom is drawn to it: Commissioner of Taxation of the Commonwealth of Australia v Murry (1998) 193 CLR 605; [1998] HCA 42 at [24]. It has been said that it is more accurate to refer to goodwill as having sources than being composed of elements, given that goodwill is to be seen as adding value to a business "by reason of" situation, name and reputation, and other matters, not because goodwill is composed of such elements: Commissioner of Taxation v Murry at [24], citing Commissioners of Inland Revenue v Muller & Co's Margarine Ltd [1901] AC 217 at 235 (Lord Lindley). It has also been recognised that many of the sources of goodwill are not themselves property, nor assets for accounting purposes: Commissioner of Taxation v Murry at [25]. [67] Generally, a stricter and less favourable view is taken of covenants in restraint of trade between employer and employee than in commercial agreements. As Mason P explained in Woolworths Ltd v Olson at [38]: "[38] The courts in general take a stricter and less favourable view of covenants in restraint of trade entered into between employer and employee than of similar covenants in commercial agreements (Geraghty v Minter (1979) 142 CLR 177 at 185). The reasons are explained in J D Heydon, The Restraint of Trade Doctrine (2nd ed, 1999) at pp68-9. It is nevertheless well established that an employer may have interests capable of protection by a restraint covenant. These interests go beyond protection of goodwill and retention of customers and extend to trade secrets …" [68] The same point is made by JD Heydon in the most recent edition of The Restraint of Trade Doctrine (4th ed, 2018, Chatswood, LexisNexis Butterworths) at 96-97, where four main reasons are given for the court's approach in employment cases. First, the inequality of bargaining power between the parties. Second, the employee may be giving up that employee's only asset, which depends on specialised training and which may not be at all negotiable. Third, when labour is hired it remains valuable whether or not the employee later competes. Fourth, once the employee accepts the post-employment restraints, the employer's power during the contract is much increased by reason of the inhibition on the employee's ability to threaten to leave and seek work elsewhere. … [71] BB Australia Pty Ltd v Karioi Pty Ltd (2010) 278 ALR 105; [2010] NSWCA 347 concerned restraints in a franchise agreement. Macfarlan JA remarked at [61]: "[61] Franchise agreements commonly have characteristics relevant to both employment and vendor/purchaser categories … As a result, to determine whether the stricter, less favourable view taken in the employment cases should be applied to the present case, it is necessary to look carefully at the features of the particular franchise relationship in question, without presuming in advance that the approach relevant to one rather than the other of the categories is necessarily applicable." [72] In Bridge v Deacons [1984] 1 AC 705, doubt was expressed as to whether the legitimate interests can be necessarily ascertained by placing the relevant agreement in a particular category and then trying to align that category with existing cases, such as employment cases or sale of business agreements. Bridge v Deacons involved a restraint clause in a partnership agreement. Lord Fraser, delivering judgment of the Privy Council on behalf of the other Lordships, observed at 714 that: "The agreement in the present case, being one between partners, does not conform exactly to either of the types to which reference has just been made, although it had some resemblance to both. Their Lordships are of the opinion that a decision on whether the restrictions in this agreement are enforceable or not cannot be reached by attempting to place the agreement in any particular category, or by seeking for the category to which it is most closely analogous. The proper approach is that adopted by Lord Reid in the Esso Petroleum case [1968] A.C. 269, where he said, at p. 301: 'I think it better to ascertain what were the legitimate interests of the appellants which they were entitled to protect and then to see whether these restraints were more than adequate for that purpose.' "
Finally, it is well settled that an employer's customer connection is a protectable interest. In Cactus Imaging Pty Ltd v Peters (2006) 71 NSWLR 9, Brereton J (as his Honour then was) said (at [25], [36]): 25 It is plain that an employer's customer connection is an interest which can support a reasonable restraint of trade [Hitchcock v Coker (1837) 6 Ad & El 438, 454; [1835-42] All ER Rep 452, 456-7 (Tindal CJ); Herbert Morris Ltd v Saxelby, 709; Dewes v Fitch [1920] 2 Ch 159, 181; Coote v Sproule (1929) 29 SR (NSW) 578, 580 (Harvey CJ in Eq); Lindner v Murdock's Garage, 633-634 (Latham CJ, Webb J agreeing), 650 (Fullagar J), 654 (Kitto J); Koops Martin v Reeves, [29]-[33]]. Such a restraint is legitimate if the employee has become, vis-à-vis the client, the "human face" of the business, namely the person who represents the business to the customer - or, as it was put by Hoover J in Arthur Murray Dance Studios of Cleveland Inc v Witter 105 NE (2d) 685, 706 (Ohio, 1951): "The personal relation between the employee and the customer [is] such as to enable the employee to control the customer's business" [Twenty-First Australia Inc v Shade (NSWSC, Young J, 31 July 1998, unreported), BC9803667, 12; Koops Martin v Reeves, [34]]. While the employer is not entitled to be protected against mere competition by a former employee, the employer is entitled to be protected against unfair competition based on the use by the employee after termination of employment of the customer connection which the employee has built up during the employment - which, because the employee has in effect represented the employer from the customer's perspective during the employment, might at least temporarily appear attached to the employee, but in truth belongs to the employer [Koops Martin v Reeves, [30]]. … 36 … Generally, the test of reasonableness for the duration of a non-solicitation covenant, when it is supported by customer connection, is what is a reasonable time during which the employer is entitled to be protected against solicitation, which in turn depends on how long it would take a reasonably competent replacement employee to show his or her effectiveness and establish a rapport with customers [Stenhouse v Phillips; Daly Smith Corporation (Australia) Pty Limited v Cray Personnel Pty Limited (NSWSC, Young J, 14 April 1997, unreported)]. A related, albeit subsidiary, consideration is how long might the hold of the former employee over the clientele be expected to last before weakening [Koops Martin v Reeves, [88]]…

Repudiation

The plaintiff submits it did not repudiate the Employment Contract. Rather, it submits that: 1. prior to any restructure, the defendant either requested that her employment be transferred to Melbourne or, even if she was asked to move, she did so willingly; and 2. post the relevant restructure, the only changes to the defendant's position were a change in title and a requirement that she report to Ms Michelle Forbes rather than Mr Adam Farr.
There were the plaintiff says no other changes to the defendant's role and certainly no changes that would suggest a fundamental breach of the Employment Contract.
The defendant, on the other hand, submits that the plaintiff repudiated the Employment Contract through the restructure which resulted in material or significant changes to her employment being unilaterally imposed upon her without any consultation. In particular, the defendant submits that the Employment Contract and position description specify that she was responsible for team management, while an organisational chart dated 1 March 2018 shows that the defendant had a team of 12 reporting to her. It is submitted, however, by the time of the communication of the restructure, it was clear that the plaintiff did not intend for her to have the same position description, responsibilities, title or reporting lines, or for her to remain at the North Ryde Office; her entire team was taken away from her and she was directed to report to someone in her old role (see Cameron v Asciano Services Pty Limited [2011] VSC 36 at [45], cited in Paul Fishlock v The Campaign Palace Pty Limited [2013] NSWSC 531 at [126] ('Paul Fishlock')). Accordingly, the defendant submits that she was entitled to terminate the Employment Contract (Crowe v Holwarth (Aust) Pty Limited v Loone [2017] VSCA 181 at [137]; Paul Fishlock at [129]), which she did, and, by reason of the plaintiff's repudiation, the restraint of trade became inoperative (Paul Fishlock at [257]; McDonald v Denny Lascelles (1933) 48 CLR 457, 469-470, cf 476-477). The defendant submits that the reference to termination in clause 7.1 does not extend to termination for repudiation.

Enforceability of the non-solicitation restraint

The plaintiff submits that the non-solicitation restraints contained in the Employment Contract are reasonable and enforceable, taking into account several factors. It submits that the fact the defendant agreed to the restraint and expressly agreed that it was no more than what was reasonable provides evidence in support of the restraint (Russ Australia Pty Ltd v Benny [2006] NSWSC 1118 at [49]). It submits that the defendant was required to acquire specialised knowledge and influence over the plaintiff's clients, and that she was in a position where she would become aware of confidential information that was key to a profitable business in the industry (Landmark Underwriting Agency Pty Ltd v Kilborn [2006] NSWSC 1108 at [60]) and which would give her an advantage in winning work from the plaintiff (Cactus Imaging Pty Limited v Peters (2006) 71 NSWLR 9 at [20]-[21]). The plaintiff further submits that the defendant had a significant level of customer contact and clearly had (and continues to have) influence over the portfolio of clients she performed work for, the largest portfolio in the company. The plaintiff submits that the duration of the 12 month restraint is reasonable, particularly having regard to Hammerschlag J's remarks in OAMPS Insurance Brokers Ltd v Hanna [2010] NSWSC 781 at [76], which they say apply equally in this case.
On the other hand, the defendant submits that there is no cogent evidence demonstrating that she acquired any unique or specific information about her client's needs that would assist her to compete in the market, or that clients were at least temporarily attached to her. Further, with respect to the second limb of the definition of "Client" (see above), the defendant submits that there is no evidence that she acquired influence over or special knowledge of the plaintiff's broader clientele that would justify upholding that limb of the restraint. With respect to duration, the defendant submits that there was no cogent evidence about the reasonable time during which the plaintiff is entitled to be protected against solicitation or how long it would take a reasonably competent replacement to establish a rapport with customers. Finally, the defendant submits that since the contract was made, the defendant has been rendered blind, is now 51 and was demoted by the plaintiff. It is submitted that these future developments ought to be taken into account.

The evidence

The plaintiff called four witnesses, only two of whom were cross examined. The defendant was the only witness called for the defendant's case.
The plaintiff called Mr Andrew Broughton. He made two affidavits, one dated 6 March 2020 and the other dated 1 June 2020.
In his affidavit of 6 March, he stated he was the CEO of Network Insurance Group. He set out the structure of the Network Insurance Group of which the plaintiff is a member. He stated the employment history of the defendant as having signed a contract with Steadfast on 11 May 2016. She later signed an updated schedule setting out changes to her employment effective from 1 October 2017 (at [15]-[16]). He also set out a number of her position descriptions over the years (see [17] and associated exhibits). He stated that at the time her position ended with the plaintiff she was responsible for managing relationships with clients, selling products and services offered by the plaintiff and managing one staff member under her supervision (at [19]).
He also set out the information and clients she had access to whilst at the plaintiff (at [21]-[28]). He stated she worked from the North Ryde office in 2013 when she started and from Norwest office from 2018 when North Ryde office closed (at [29]-[30]). He recorded her move to Melbourne and her reporting to Michelle Forbes and himself and that she had one person reporting to her, a Mr Pamute (see [35]). Prior to her move to Melbourne, she reported to a Mr McCauley, NSW Manager, and again had Mr Pamute report to her (see [34]). He then set out an email he received from the defendant on 11 April 2019 and quotes a section from her LinkedIn page (37 and (b)). He then explained the restructure which was announced on 26 July 2019. He accepted that it had the effect of changing her title from Account Director to Account Manager. He stated her reporting lines changed as a result of her move to Melbourne but Mr Pamute continued to report to her; otherwise there was no change to her duties and responsibilities and no change in her remuneration or other benefits (see [42]-[44]).
He then set out some correspondence and other matters concerning her non-solicitation clause (at [46] and following).
In his second affidavit of 1 June, he largely responded to affidavits of the defendant.
He agreed that the defendant had been with the plaintiff for about 21 years and that during her employment and as a result of acquisitions the defendant had been transferred to the plaintiff (T.27). He had difficulty agreeing to her various role changes due to his lack of knowledge of the Sydney office and a paucity of records (T.27). He was unsure about some aspects of her qualifications or her moves because he was not aware from personal knowledge (T.30). He however denied directing her transfer to the Melbourne office (T.30). He denied a link between the closure of the Norwest office and the defendant's move to Melbourne (T.32). He wanted however to understand what her move to Melbourne would involve (T.32). He agreed there was no email containing a request by the defendant that she be moved to Melbourne (T.33). He was unaware she needed to undergo medical procedures in Sydney (T.33). He denied it was the plaintiff's desire that the defendant transfer to Melbourne because the Norwest office was closing (T.34). He went on to say that it cost the business to have her in Melbourne and she could have worked from the North Sydney office or from home (T.34) and that the plaintiff made the transfer possible for her (T.34). The defendant had advised that she could deal with her clients from Melbourne "and we trusted her judgment" (T.35). He did not recall telling her to curb her spending (T.35) and the plaintiff could not pass on her travel and other expenses. He agreed her title changed and that she did not have her previous title (T.36).
He was unable to comment on an organisational chart (TB.42) as it was before his time (it shows the defendant as head of Team 1 and twelve people in the team as at March 2018, the date the document bears) (T.37). He was unable to say if the document was accurate or not (T.38). He accepted that it was an authentic document but was unable to comment further on it (T.40).
He agreed there was a difference between Account Director and Account Manager. He was not aware that Mr Lor at one point reported to her (T.41). He also agreed that her position description mentions a "team". He agreed that an Account Manager manages an account executive such as Mr Pamute but that is certainly not the scope of a team managed by a "true account director" (T.42).
He nonetheless maintained that the defendant maintained the same position after restructure (T.42). He could offer no explanation for the existence of the 2018 organisational chart because it was before his time (T.43). He did say that moving Mr Pamute was also costly and that he was given a pay rise and that the plaintiff had facilitated his move to Melbourne (T.44).
The next witness was Mr Adam Farr. He made two affidavits, one dated 1 June 2020 and the other dated 9 June 2020.
In his first affidavit, he stated that he joined the Network Insurance Group in 2018 as Managing Principal (at [4]). He was made Chief General Manager in March 2019 (see [9]). Prior to his joining, a Mr Adrian Humphreys was the CEO of the plaintiff and Ms Wendy Kelly was the COO based at the Norwest office (see [14]).
He said that he informed all staff by email on 8 October 2018 that he had taken over leadership of the NSW office and also announcing Mr McCauley's appointment as a Manager of brokers from December 2018 (at [20]). Prior to his arrival in late 2018, the defendant reported to Ms Kelly as COO. He supervised the defendant until Mr McCauley took over in December 2018 (see [26]). From at least 31 January 2019, the only person reporting to the defendant was Mr Pamute (see [31]).
He also stated that the defendant was the relevant face of the business so far as clients went ([42]-[43]). He then gave evidence of what establishing relationships with clients tends in his view to involve (see [46] and following).
He stated that he had a conversation with the defendant in or around February 2019 in which the defendant raised her relocation to Melbourne. She told him her husband was working in Melbourne. In the next three or four months he had numerous conversations with the defendant along similar lines (see [62]). As a result of the conversations he spoke to Mr Broughton ([63]-[64]). A decision was taken to accommodate the defendant, although there was no benefit to the plaintiff in doing so ([65]-[66]).
He then referred to a series of emails, a number on 11 April (see [67]-[70]). The defendant worked from the Melbourne office from 6 May 2019. Mr Farr received an email from the defendant on that day (see [73]). Another email followed on 23 April from the defendant ([74]). He responded on 25 April ([75]). The balance of the affidavit responds to the defendant.
His affidavit of 9 June is a short response to the defendant's materials.
In cross examination, he stated that he worked in the Melbourne office for four months from about May 2018 (T.9). He shortly after moved to the North Sydney office (T.9). He agreed there was a proposal to lease out the Norwest office as at January 2019. He agreed that the defendant's request to move to Melbourne was about the same time things were being wound down in the Norwest office (T.11).
He was aware that the defendant had a number of health issues but not that she had had neurosurgery (T.12). All of the defendant's clients were Sydney based (T13). He explained that when the defendant wanted to move to Melbourne they entertained the prospect of Mr Pamute relocating to Melbourne (T.14). The Norwest office was too much space for the number of employees (T.15). It was not in the business's best interest for the defendant to move to Melbourne given the expense of her flying back and forth given nearly one hundred per cent of her clients were NSW based (T.15). He was shown an organisational chart dated 28 February 2018. He agreed it showed the plaintiff as being at the head of eleven names (T.17). Although the chart is in the documents, his observation when he arrived at the Norwest office was that the defendant was not managing the people that appear on the chart (T.17). He did not create the chart (T.17). He agreed that he attached the chart to an email but simply to organise how many staff there were (T.18). He disagreed that the chart showed the organisational structure (T.19) and expressed the same view in relation to the 1 March 2018 organisational chart (T.17). He also agreed that a 2016 document showed the defendant doing performance appraisals (T.19).
He could not agree that the "constant reference" to the defendant's said "team" was appropriate (T.22). He stated that a manager should conduct performance appraisals, approve leave, and review remuneration but the defendant was not doing any of those things when he arrived in the Norwest office. He said that a Ms Wendy Kelly along with Mr Adrian Humphreys were for example reviewing salaries etc and that the only person that the defendant was managing was Mr Pamute (TT.23-24).
Mr Lor made only one affidavit of 9 June 2020. He stated that he had been employed by the plaintiff since April 2013 (at [3]). He stated that in 2018 Mr McCauley started working in the Norwest office. He started reporting to Mr McCauley after he commenced. Prior to that he had been reporting to the defendant (see [5]-[6]). The time when he started reporting to Mr McCauley was at the latest when the defendant relocated to Melbourne ([7]). Ms Ramos has since 2013 reported to Mr Lor and not the defendant ([9]). Since the restructure, Mr Lor's title has changed from Account Director to Account Manager. He had no issue with this as neither his remuneration nor his duties changed (see [9]). Mr Lor was not cross examined.
Mr Mark made two affidavits, one dated 29 May 2020 and the second dated 9 June 2020.
In his first affidavit, he stated he was head of Human Resources and set out the various complaints made by the defendant at meetings held. In particular, he denied using the term "irreparable" in conversation with the defendant during one of the meetings (see [16]). The balance of the affidavit is responding to various assertions by the defendant. His second affidavit simply annexes some handwritten notes of a meeting with the defendant on 20 August 2019. He was not cross examined.
The defendant made two affidavits, one dated 5 May 2020 and the other dated 4 June 2020.
The defendant commenced employment with Indemnity Corporation (now owned by the plaintiff) as an Account Broker in November 1998 (see [6]). She was promoted a year later to the position of Account Executive. In 2001, she was again promoted to the position of Account Manager. In 2004, she completed a diploma of financial services specialising in insurance broking. She was promoted to Divisional Manager in 2013. In 2015, her role was changed from that to Account Director and she had two staff reporting to her, one of whom was Mr Pamute (see [7]-[11]).
In July 2016, her reporting was again changed and she was directed to report to Mr Wiseman, the then General Manager ([12]). She asserts that in 2017 she was appointed Team Leader with eleven brokers and one assistant reporting to her ([13]). She reported to Mr Wiseman until he semi-retired and then to Mr Humphreys ([15]). After October/November 2018, she reported to Adam Farr ([17]).
Her duties she asserted as Account Director are set out at [18] but include preparing budgets and managing the team. In 2016, she was diagnosed with a brain tumour and her work arrangements changed ([19]-[20]). She accepts that on 11 May 2016 she signed a new employment contract ([24]). She also stated that her husband had moved to Melbourne in 2010 because of his employment ([16]). She said that at a conference at Darling Harbour in October 2018, Mr Broughton said she could work out of the Melbourne office, to which she stated she would consider it ([27]). After the conference, Mr Farr made the same statement to her about working out of Melbourne but she had no intention of going to Melbourne ([29]-[30]).
However, in February 2019 she was told by Mr Farr that she was being transferred to Melbourne ([31]). In March 2019, she had a similar conversation with Mr Farr who asked when she was able to make the move ([32]). She asserted that she was excluded from a conference in March 2019, no longer has access to certain emails from this period, and that she was without explanation uninvited to a Strategy Planning Conference ([33]-[35]).
Upon moving to Melbourne, she travelled to Sydney from time to time. She was surprised to learn she was reporting to Michelle Forbes ([43]). She was also warned about incurring "big" travel expenses going to Sydney ([44]). She felt stressed at having to explain her absence from the Melbourne office ([45]-[47]). She asked Michelle Forbes for a few days off in July 2019. She was asked to raise this with Mr Farr who refused and who told her she would have to apply for annual leave ([49]). She said she then, without warning or consultation, received an email from a Luke Calderon, the COO, announcing a new structure and she noticed that her role had significantly changed, and that she had been demoted two levels (see [55] and the PowerPoint presentation at TB.83-97). The change in her position impacted her status in the industry and her career prospects ([59]).
According to the defendant, Mr Mark in effect made an admission to her that the damage done (presumably to the defendant) was irreparable and that the "environment" had become too toxic. The balance of her first affidavit is about the various complaints she made (see [61]-[70]) and responses to the plaintiff's affidavits.
The defendant's second affidavit provides further responses to the plaintiff's evidence. The defendant stated (at [6]) that "I only ever accepted the direction to transfer to work from the Melbourne office upon the assurance I could travel to Sydney whenever I needed to visit my clients."
In cross examination, she agreed she was a good broker with a large portfolio of clients. Also that it is important to know the client's business and what they want (T.53). By 2016, she had been employed for twenty years and some of her clients were long standing (T.54). The policies she sold were for a period of twelve months and the renewal date could be any time during the year (T.54). The history of the broker dealing with a client is important and usually the broker starts discussing renewals about three months in advance of the policy expiring (T.55).
She asserted she never wanted to move to Melbourne and never requested it (T.55). She also stated she had no desire to move to Melbourne (T.56). She was shown an email of 11 April 2019 and agreed she planned to move to Melbourne. She also stated that after she was told she was going to be transferred she was happy about the decision, but she did not ask for it (T.56). The plaintiff was not making it possible at her request (T.57). She also stated that the transfer was offered to her. However, shortly thereafter she stated it was not an offer and that she was told she was moving to Melbourne, and she denied requesting the move (T.57).
She agreed she started working in Melbourne on 6 May and she was "happy with the move" (T.58). She agreed she did not complain about it (T.58). She also agreed that there were no changes to her daily processes and she arranged to travel to Sydney to attend to clients (T.59). She was upset having had a busy end of financial year and that she was denied two days off (T.60). She again agreed she was happy in Melbourne but again denied she had requested the move (T.62). Having formed the view she was demoted, she did not return to work and did not perform any work after 26 July (T.63). She asserted the brokers were reporting to her before and after she went to Melbourne and reiterated she had a team of 12 brokers reporting to her (TT.63-64). It was put directly to the defendant that since Mr McCauley came into the business she had no brokers reporting to her. She denied that (T.64). She stated that the first time she understood Mr Pamute was the only person reporting to her was on 21 July (T.64).
She agreed that the job description (TB.32) was the correct one and that it did not identify anyone else reporting to her except Mr Pamute. She also agreed that that was the position description that never changed (T.65). She was unable to say whether there was ever an update to her position (T.65). She agreed that she was told that there was no change to her responsibilities and the hierarchy remained unchanged and further that she was not demoted (T.67). As a result of the restructure she did not have people reporting to her and her role as an Account Manager was different to that of Account Director (T.68). She agreed that there was no change in her remuneration or work with clients and Mr Pamute still reported to her (T.70).

Consideration

There are a number of factual disputes to be resolved. The first is whether the defendant was directed to relocate to Melbourne or whether she requested it. By the end of the trial, both the plaintiff and the defendant had somewhat arrived at a similar position. Indeed, both sides had in effect put it to one side. The plaintiff's case is that the defendant requested relocation to Melbourne, whereas the defendant asserts she was told by Mr Farr that she was required to relocate. The reason no doubt why the issue has to some extent evaporated is the defendant's frequent and unqualified acceptance in cross examination that she was happy with the move. This allowed the plaintiff to assert with some force that at the very least the move was consensual. Whilst that cannot be gainsaid, I take a different view as to the consequence of the issue.
First, the defendant's case theory, apart from inviting the court unequivocally to accept the defendant's version of her conversation with Mr Farr, as best I understood it was that the closure of the Norwest office was somehow connected to the defendant relocating to Melbourne. The connection was never really logically explained and, for example, Mr Broughton and Mr Farr denied the closure of the Norwest office had anything to do with the defendant's move to Melbourne. I accept their denials. As each pointed out, it actually cost the business money to transfer the defendant and her assistant, Mr Pamute, to Melbourne and all or at least the majority of the defendant's clients were also in Sydney.
It was indeed the defendant who clearly had the motive and in my view the desire to move by reason of her husband living there. No doubt over the years it had become quite stressful maintaining her marriage with her husband commuting between Sydney and Melbourne, which they had apparently done for some years. In addition, the only contemporaneous documents touching the matter are a series of emails, the tone and content of which can only support in my view an inference that it was the plaintiff's desire and plan to relocate to Melbourne. When Mr Broughton asked the defendant in an email of 11 April 2019 how her "planned move to Melbourne" was tracking, she responded later that day not by rejecting that notion but instead thanking him on her and her husband's behalf for "making this possible" (TB.49-50). On 6 May 2019, the day she started work in Melbourne, she further informed Mr Broughton by email that "this place is beautiful…all settled and we just love it. !!" (TB.53). In addition, on 31 May 2019, her Linkedin post speaks of her having been offered relocation to Melbourne and having accepted the offer "without a second thought as I needed this change for myself" (TB.169).
I am satisfied that the plaintiff either requested or engineered her move to Melbourne. Although the plaintiff had a Melbourne office at the time and although it would be costly, it sought to satisfy and accommodate the defendant's wishes. There is no doubt in my mind the defendant thought the move was entirely in her interests. I reject her evidence that she was directed to relocate. She clearly wanted the move and was happy about it - she said so explicitly in some of her answers in cross examination.
The reason why this factual issue is of importance in my view is that it not only goes to her credit but to her reliability as an historian.
There was much debate about the manner in which she conducted her employment and the full extent of her responsibilities. The defendant's case was that in effect right up to the time of the restructure she was head of a team of some eleven or twelve people, each of whom reported to her. Upon the restructure she asserts at least two things happened. First, her team had disappeared except for Mr Pamute, her "assistant", and second, her title was changed from Account Director to Account Manager. It is accepted that her remuneration and other benefits remained unchanged.
There is no dispute in this case that her contract of employment was signed by her on 11 May 2016. She later signed a schedule updating her contract which took effect on 1 October 2017. Her position description, which is referred to in the contract (clause 2.4.1.), remained unchanged upon the signing of that updated schedule.
Importantly, that contract and position description, although they describe her as an Account Director, make plain that the only person to report to her was Mr Pamute. She clearly appreciated that is what her contract and position description expressly stipulated. She was to report to Mr Wiseman, although a handwritten change indicates that Mr Farr was her immediate manager. The position description unsurprisingly sets out her responsibilities she accepts accurately as at the date she ceased attending the office in Melbourne (T.72). She had no contractual obligation to any other persons except Mr Wiseman, Mr Farr and Mr Pamute, and Ms Forbes and Mr Broughton when she relocated to Melbourne.
Further, neither the contract nor the position description requires other brokers to report to her, or for her to prepare budgets for her portfolio, prepare strategic plans for business growth or assist others in those endeavours. It did require her to perform performance appraisals of Mr Pamute.
Much reliance was placed by the defendant on an organisational chart of 1 March 2018. There is no suggestion it is not authentic. What it does purport to show on its face is that the defendant was as at the date of the document at the top of a list of names, twelve in total. The group is described in the document as "Corporate Team One". No witness called by the plaintiff could give a satisfactory explanation for the document's existence. That said, although at that point in time (March 2018) it provides some support factually for the defendant's version of events that she had a team of people on one view reporting to her, it certainly is not said by her to amount to a variation to her contractual rights and obligations, nor could it.
Not irrelevantly, Mr Farr gives evidence which I accept that he did not observe any person other than Mr Pamute reporting to the defendant. It is clear that there was a turnover of some staff. For example, the defendant asserts that a Ms Perkins was a person reporting to her but as Mr Farr points out she left the business on 31 January 2019. An earlier version of the organisational chart which appeared to be dated 28 February 2018 (TB.191) was said to show that five of eleven people who fell under the defendant's "Corporate Team One" on both charts, whose names were coloured in red on the 28 February 2018 chart, had left the business by the time of Mr Farr's email dated 23 January 2019 (see TB.190 and T.91).
Further, no evidence was called by the defendant to corroborate the large team that reported to her. Mr Lor, called by the plaintiff, accepts that he reported to her prior to Mr McCauley starting employment in 2018. Thereafter, he reported to Mr McCauley. He was not challenged on that evidence nor on the fact that a Ms Ramos, also shown on the 2018 organisational charts as allegedly reporting to the defendant (and not one of the employees said to have already left the business), was in fact reporting to him from about 2013. That suggests that at least seven of the twelve people said to form part of the defendant's team up to the restructure did not report to her from at least January 2019.
Further, in her email to Mr Broughton of 2 August 2019 the defendant, notwithstanding her reference to the 2018 organisational chart, states quite clearly that until the restructure she had been managing her portfolio with only one assistant, which portfolio she asserts was the largest corporate portfolio in the company. This claim is repeated at [44] of her 4 June 2020 affidavit. She was not cross examined on this email or that section of her affidavit but the email in particular adds support to the proposition she is an unreliable historian as it is at odds with her claim that she was managing a large team. The email was intended no doubt to be a detailed and comprehensive account of the defendant's complaints at 2 August 2019. Her principal complaints were a lack of consultation and the change in her title and the assertion that as a result she was demoted. Other than pointing out the contents of the March 2018 organisational chart (which cannot be said to reflect the true position up to the restructure), she made no mention of having managed or supervised anyone other than Mr Pamute or which if any team members in particular had been taken away from her.
There were other very serious complaints in the email about other forms of discrimination which were not ventilated in the proceedings.
On balance, the changes in reporting lines, the relocation to Melbourne and the change in title do not amount to a repudiation by the plaintiff. I am not satisfied that her complaint about the alleged removal of her team is made out. First, I am of the view it is factually flawed. Apart from the organisational chart of March 2018, there is little if any support for her assertions. Her contractual obligations did not oblige her to tend to a team as such and certainly no specific team was identified in the contract or position description.
The sum total of the evidence of Mr Farr and Mr Lor is that at the very best the defendant's assertions about a team are an exaggeration and certainly after the end of 2018 factually false. Her email of 2 August, her assertion she was managing the largest portfolio in the company with only one assistant, and the absence of any mention of anyone else that had actually been working beneath her up to the restructure is hard to reconcile with her managing a team.
On the basis that there has been no repudiation of the contract, the question that arises is the period of restraint that is reasonable.
The restrictive covenant is to be found in cl.5.5.2.(a) and the restraint period is defined as "cascading" periods of restraint ranging from twelve months down to three months after the end of the employment. Although the point was not taken, it should be observed that this type of clause is enforceable and not void for uncertainty (see Hanna v OAMPS [2010] NSWCA 267 at [12], applied in CGI Glass Lewis Pty Ltd v Vasey [2019] NSWSC 794 at [35]-[36] (an interlocutory decision); Popham Holdings Pty Ltd v Franklin [2016] VSC 597 [67], [72]; Bulk Frozen Foods Pty Ltd v Excell [2014] TASSC 58; 24 Tas R 471 at [9]; see also Seven Network (Operations) Ltd v Warburton (No 2) [2011] NSWSC 386; 206 IR 450 at [37]-[41]).
The plaintiff submits that a twelve month restraint is appropriate; the defendant on the other hand submits none of the restraints are reasonable and hence none is enforceable.
The reasonableness of a restraint is to be determined as at the time it is entered, although the court may exercise a discretion as to the appropriate relief to be granted at the date of the hearing (Otis Elevator Company at [17]-[30]). However, a restraint which is enforceable at the time of the contract cannot become unenforceable merely because it would operate unfairly in changed circumstances (Shell UK Ltd v Lostock Garage Ltd [1976] 1 LR 1187, 1198 ('Shell')). Here, it is submitted that the defendant suffers with and has suffered from serious health issues. In effect, a plea of hardship is made. There may well be an issue given the decision in Shell (supra) as to what extent if at all such matters can be taken into consideration in the exercise of discretion. I note that in Tullett Prebon (Australia) v Simon Purcell [2008] NSWSC 852 at [88]-[89] Brereton J specifically referred to hardship at the date of relief as a relevant factor. However, in this case, although there is no controversy that the defendant had serious health issues leaving her blind in one eye, there is no evidence from the defendant or any medical witness as to the extent and/or consequence of such issue in so far as the defendant is concerned. It is not an issue which was developed in the case. Indeed, it has not been said, for example, that it affects her employment activities in any way at all. In my view, this cannot in the end bear on the question of the reasonableness of the restraint or the appropriate relief.
The starting point is to observe that the defendant voluntarily agreed to the restraint and expressly acknowledged its reasonableness. Although, as the authorities point out, this does not make it so (see, e.g., Idameno (No 123) Pty Ltd v Dr Therese Angel-Honnibal [2003] ATPR ¶41-918; [2002] NSWSC 1214 at [51], aff'd (2003) 59 IPR 184; [2003] NSWCA 263; see also J D Heydon, The Restraint of Trade Doctrine (Butterworths, 4th ed, 2018) p 186 and the authorities cited there).
The defendant submits that there is no evidence demonstrating that she acquired any special information about her clients' needs that would justify the restraint or that clients were even temporarily attached to her. However, the defendant had necessarily a significant level of client contact and was not only successful but very good at her job. On her own evidence she was responsible for the largest corporate client portfolio at the plaintiff. In many instances she had serviced the clients for a period of years.
It may be inferred that an experienced broker such as the defendant would need, intimately to be aware of a client's business in order, properly to assist the client identify likely risks to its operations. As a result, not only would a broker advise on the desirable contractual arrangements to suit the particular client's needs but she would also seek out the most cost effective cover. In successfully performing those tasks on behalf of her clients, year in year out, the defendant undoubtedly built up trust with those clients which in turn enhanced her employer's business. There can be no doubt in my mind that the defendant was clearly attuned to and kept herself aware of the commercial needs of her clients. The maintenance of good client relations had I am satisfied an impact on clients renewing their policies. The policies were generally for periods of twelve months. Renewal dates would of course vary policy to policy and that could be at any time throughout the year. The 90 day period prior to the renewal date was the most critical time for securing a client (see TT.53, 54 and 55).
Mr Farr gave unchallenged evidence that her portfolio of clients produced annual income for the plaintiff of approximately $780,000 and he agreed that her portfolio comprised the largest portfolio of corporate clients within the plaintiff. Importantly, she met with clients about three times a year and was usually the sole point of contact for the clients in her portfolio.
As to the broader second limb of the definition of "Client", by which the parties expressly agreed to extend the restraint to clients outside of the defendant's immediate portfolio, the defendant is a highly skilled broker of over twenty years' experience and on her own evidence was a "high performer" (T.52). She had built strong relationships with clients over many years (T.53) and held a relatively senior position within the plaintiff, which is said to form part of the largest insurance broker network in Australasia. It is likely that the clients who made up the defendant's portfolio and the significance of particular clients to her portfolio varied over time. Undoubtedly and deservedly, she must have enjoyed a very good reputation within the industry and would undoubtedly have been identifiable with the plaintiff's brand. Some clients may feel some sense of loyalty to the plaintiff and its Related Companies but the defendant's experience and expertise would no doubt be attractive to others.
Determining the reasonableness of the restraint also requires the court to evaluate what is the reasonable time during which the employer is entitled to protection against solicitation of clients with whom the employee had contact and influence and who were not bound to the employer, for example, by contract or by stability of association. Such an assessment can seldom be precise (Stenhouse Australia Ltd v Phillips [1974] AC 391, 400).
The factors identified by Hammerschlag J in OAMPS Insurance Brokers Ltd v Hanna [2010] NSWSC 781 at [76] are relevant here. The comments of his Honour in that paragraph bear an uncanny resemblance to the present case. The insurance industry has a number of idiosyncratic milestones which recur annually. The efficient and timely implementation of each step has a direct impact on a broker's revenue stream. There is no evidence here as to precise renewal dates but as I have noted it is generally accepted that policies are renewed annually and the defendant agreed that is the case (T.54).
In this case I am of the view that a restraint of twelve months is reasonable, valid and enforceable in the circumstances. There is certainly some evidence from the defendant herself that she has breached the non-solicitation restraint. Without setting the evidence out in detail, her contact with Botany Foods, BMG Air Conditioning, Matt Daley Demolition and the Palm Beach Surf Club, and her contact with Paul Taylor at Kraus Naimer (see the defendant's affidavit of 5 May 2020 at [110], [111], [112], [114] and [115]) would arguably provide a basis for such a conclusion.
In the circumstances I would find for the plaintiff and dismiss the defendant's cross claim. The relief sought by the plaintiff in prayer one of its statement of claim extends to the non-solicitation of employees and suppliers as well as clients. However, in written submissions the plaintiff stated that it was only seeking to prevent the solicitation of clients and its submissions were it seems only addressed to that issue. It is necessary to clarify the precise relief sought.
I will hear the parties on the terms of the proposed short minutes, on costs and the further progress of the matter.

Amendments 31 July 2020 - cover page and para [46] Dargan Financial DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 31 July 2020

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