Wallis Nominees (Computing) Pty Ltd v Pickett [2013] VSCA 24
[2013] VSCA 24
At a glance
Source factsCourt
Court of Appeal (Vic)
Decision date
2013-02-20
Before
Warren CJ, Redlich JA
Source
Original judgment source is linked above.
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[2013] VSCA 24
Court of Appeal (Vic)
2013-02-20
Warren CJ, Redlich JA
Original judgment source is linked above.
CONTRACT - Restraint of trade - Employer and Employee - Employer a consulting firm and the employee an IT consultant - Legitimate interest - Reasonableness of restraint - Duration - Scope - Severance - Clause unreasonable and void.
APPEAL - Ground of appeal contained an argument expressly not run at trial - Whether argument not run at trial permitted to be run on appeal - Interests of justice - University of Wollongong v Metwally (No 2) (1985) 59 ALJR 481; Trans Petroleum (Australia) Pty Ltd v White Gum Petroleum Pty Ltd [2012] WASCA 165; Banque Commerciale SA En Liquidation v Akhil Holdings Ltd [1990] HCA 11; (1990) 169 CLR 279 applied.
1 The respondent, Mr Pickett, worked for the appellant, Wallis Nominees (Computing) Pty Ltd ('DWS') as a consultant from July 2007 until February 2012. As a consultant Mr Pickett would be assigned to work with companies who had contracted with DWS and to supply them with services on DWS' behalf. In February 2011 Mr Pickett was assigned to work with Grocon Pty Ltd ('Grocon'). After working there for about 11 months, Grocon told Mr Pickett they were restructuring their IT department and offered him a job as the IT operations manager. Mr Pickett accepted the position at Grocon and resigned from DWS.
2 DWS sought to invoke the restraint of trade clause in Mr Pickett's contract to prevent him from supplying services to Grocon, their now-former client. Ultimately, DWS brought proceedings against Mr Pickett. The learned trial judge found that if the restraint clause was valid, Mr Pickett would be in breach of it because of an overlap between the services being provided by Mr Pickett while employed at DWS and deployed at Grocon, and while employed by Grocon.
3 However, the learned trial judge held that the relevant restraint of trade clause in Mr Pickett's employment contract was invalid and against public policy as DWS had failed to demonstrate that it had a legitimate interest in restraining Mr Pickett. His Honour also held that even if DWS did have such a legitimate interest, the restraint of trade clause would still be invalid because it did more than what was reasonably necessary to protect that legitimate interest. The clause was not reasonable in either its extent (extending as it did to clients with whom Mr Pickett had merely had a certain type of limited contact) or its duration. DWS now appeals the decision.
4 The background to DWS' business, Mr Pickett's role at DWS and the nature of Mr Pickett's consultancy at Grocon is set out in the reasons of the learned trial judge:
DWS is the subsidiary of a public company, DWS Ltd, and is engaged in the business of providing software consultancy services including, among other services, business analytics and information management consultancy services, managed services, software application systems development and on-going support and maintenance of software. DWS typically provides these services via its employees who are contracted out to its clients as consultants in various information technology roles.[1]
5 His Honour found that this was the position as at 29 May 2007 when the contract was entered into.[2] His Honour went on to find that the Employment Agreement and a powerpoint presentation made to new DWS employees sufficiently explained the relationship between Mr Pickett, DWS and the client and Mr Pickett's role. His Honour found that:
The critical relevant features are that Pickett was to be part of a DWS team. DWS was to provide the services through Pickett. Pickett was responsible to a project leader or manager and his performance was subject to annual review. He was to be based in Melbourne and was required to travel to particular clients. He was required to maintain and promote the professional reputation of DWS and avoid any real or apparent conflict of interest. The PowerPoint presentation emphasises the business model and approach taken by DWS. Critical to the model was the emphasis on a team approach, quality control and governance.
It is clear that the duration and size of the projects would vary and Pickett would move from client to client as and when required as part of the DWS team.[3]
6 Prior to his work at Grocon, Mr Pickett provided various IT services to several DWS clients for varying lengths of time.[4] In January 2011 DWS and Grocon entered into an arrangement regarding the provision of IT services. These services were to be provided by a DWS consultant. DWS re-assigned Mr Pickett from providing services at ME Bank to Grocon, where he commenced on 7 February 2011.[5] It was made clear to Grocon 'that if Grocon was not satisfied with the services provided by Pickett another consultant could be provided to replace him.'[6]
7 According to the unsigned Masters Services Agreement between DWS and Grocon dated 24 January 2011 the services to be provided were:
a) Providing incident response and housekeeping support to the back office systems;
b) Creating procedural, process and diagram documentation as requested;
c) Creating a Service Catalogue of the back office systems;
d) Providing technical and process support to the ICT Manager;
e) Working with the Network Specialist to manage the LAN and WAN insecurities;
f) Working with the incumbent IT Team in incident and change management processes; and
g) Development of a business case from the Service Management tool.
[16] Pickett also sent an email on 20 January 2012 to DWS' Business Development Manager, James Parson, setting out the services he had provided to Grocon over the previous 6 months. They included:
a) Providing incident response and housekeeping support to the back office systems;
b) Peer review of application changes within the network;
c) Providing technical and process support to Grocon's ICT Manager;
d) Assisting the ICT Manager in the assessment of vendor proposals;
e) Working with the Network Specialist to review and improve the network configuration and peer review network configuration changes prior to changes being implemented;
f) Working with the incumbent IT team at Grocon in incident and change management processes; and
g) Managing the ICT fit out for construction site support offices.
Pickett understood his role at Grocon was to 'provide the skills required to maintain ... legacy systems while ... larger changes were planned and implemented', and as being a support role to Grocon's IT Manager, Rebecca Brockett. The precise nature of the role evolved as the needs of Grocon changed during the time Pickett worked there and as Grocon implemented infrastructure, outsourcing and information technology changes internally...
During his time at Grocon, Pickett also reported back to DWS in relation to the work being done for Grocon, for example on 20 January 2012 via email and in other meetings between Pickett and DWS.[7]
8 His Honour also made the following findings regarding Grocon's restructure and the job offer extended to Mr Pickett:
In November 2011, Grocon conducted a review of its information technology department and decided to restructure the department and to change Ms Brockett's role to that of Chief Information Officer. This change also involved creating a new permanent position entitled the 'IT Operations Manager' reporting directly to Ms Brockett. Ms Brockett was asked by Elise Loschiavo, who worked in Grocon's human resources department, to prepare a position description for the new role. Ms Brockett prepared a position description, providing it to Pickett on 5 December 2011 and then to Ms Loschiavo on 6 December 2011.[8]
9 His Honour found that, at the least, there would be at least a 30 per cent overlap between the services Mr Pickett would provide to Grocon under his new position as its employee and during his time as a consultant.[9]
10 These findings of the trial judge are not challenged.
11 The appellant is alleging that Mr Pickett, by accepting his new position at Grocon, is in breach of cl 24(b) of his employment contract ('the restraint clause'). That clause in its entirety reads:
24. Non-solicitation
The Employee agrees that he or she will not do any of the following for a period of 12 months after his or her employment with DWS ends:
(a) solicit, interfere with or endeavour to entice away from DWS any Employee or client of DWS;
(b) provide services to or accept any request to provide services (being services normally provided to DWS clients in the general course of DWS' methods of business and range of services) to any client of DWS to whom the Employee provided specific services whilst in the employ of DWS or in addition any client to which the Employee had cause to be in contact with during the normal course of the Employees provision of services to DWS Clients. Clients are defined as and limited to: any organisation or part of an organisation such as a specific project, division, section or such to which the actual services were provided.
(c) Counsel, procure, or assist any person to do any of the acts referred to in this clause.[10]
12 The phrase 'any client of DWS to whom the employee provided specific services whilst in the employ of DWS' shall be referred to as the 'first limb' of the restraint clause and the phrase 'or in addition any client to which the employee had cause to be in contact with during the normal course of the employees provision of services to DWS Clients' shall be referred to as the 'second limb'.
13 The judge found, and it was accepted by both parties on appeal, that the 'services' in the clause were the services normally provided by DWS to its clients up until the date the employee leaves.[11] Additionally, his Honour found that the first limb refers to those clients that employees provided actual services to and the second limb to those clients with whom they had an actual or specific reason to be in contact.[12]
Background principles regarding restraint of trade clauses
14 The judge set out the basic principles governing restraint of trade clauses:
[50] The principles applicable to the enforceability of contracts in restraint of trade are not for the most part in dispute. They are well settled:
(a) a contractual provision in restraint of trade is, prima facie void.
(b) The presumption can, however, be rebutted and the restraint justified by the special circumstances of a particular case, if the restriction is reasonable by reference to the interests of the parties.
(c) The validity of the covenant in a contract is to be judged as at the date of the Employment Agreement.
(d) A stricter view is taken of covenants in restraint of trade in employment contracts than those contained in contracts for the sale of a business.
(e) The onus of proving the special circumstances justifying the restraint is on the person seeking to enforce the covenant.
(f) So far as the parties' interests are concerned, the restraint must impose no more than adequate protection to a party in whose favour it is imposed. If the court is satisfied that the restraint confers greater protection than can be justified, there is no further issue of reasonableness.
(g) The meaning of the restraint clause may be construed by reference to the factual matrix, documentary context and surrounding circumstances.[13]
15 The application of these principles is not challenged.
16 DWS appeals on the grounds that the judge: erred in finding the restraint clause void; erred in failing to find a legitimate interest; erred in failing to hold that the duration of the restraint clause was reasonable; and erred in failing to hold that extent of the restraint clause was reasonable or, alternatively, would have been reasonable if the second limb was severed.
17 Mr Pickett submits that the judge did not commit any errors, that DWS should not be permitted to submit that the second limb of the restraint clause should be severed and that, in any case, the second limb of the restraint clause is not severable.
18 In essence, the following questions arise on appeal:
1. Did DWS have a legitimate interest in restraining Mr Pickett?
2. If there was such a legitimate interest, did the restraint clause do more than was reasonably necessary to protect that interest in its:
3. If the extent of the restraint clause was not reasonably necessary, was it permissible to sever that part of the clause relating to extent which made the clause unreasonable having regard to:
(a) the fact that the argument was deliberately not run at trial; and
19 For the reasons that follow, we conclude that while DWS did have a legitimate interest in restraining Mr Pickett, the clause was unreasonable having regard to both its extent and to its duration. Furthermore, although the extent (but not the duration) of the clause would be reasonable if the impugned part was severed, we would not allow DWS to raise the argument on appeal, namely that the impugned part was severable, nor, in any event, is the impugned part severable.
20 The legitimate interest alleged by DWS is its goodwill in its customers, the essence of which is its customer connections which may include knowledge of, and influence over, its customers.[14] Personal relations or connections that employees develop with customers that were acquired during the course of their employment are 'an advantage accruing to the employer and properly exercisable for his benefit ... [and] would become a source of injury to the employer if the former servant were permitted to accept the custom which might voluntarily flow to him'.[15]
21 The test for whether an employer has a legitimate interest in protecting its customer connection through restraint clauses has been put in various ways.
22 One variation is that a legitimate interest will arise
[w]here an employee is in a position which brings him into close and personal contact with the customers of a business in such a way that he may establish personal relations with them of such a character that if he leaves his employment he may be able to take away from his former employer some of
his customers and thereby substantially affect the proprietary interest of that employer in the goodwill of his business ...[16]
23 Another variation is where there is some element in the employee-customer relationship which causes customers to rely on the employee and to regard the employee as the business to the exclusion of the employer.[17]
24 A third variation is where the personal relation between the employee and the customer be such as to enable the employee to control the customer's business as a personal asset.[18] This describes 'the ability of the employee to use the relation of influence, which can properly be regarded as the employer's property, for the employee's purposes as distinct from those of the business'.[19]
25 A fourth variation is where the employee is described as having become the 'human face' of the business. This is understood to mean that the employee has become the person who represents the business to the customer[20] or has such a personal relation with the customer as to enable them to control the customer's business,[21] or as a way of emphasising 'that the source of influence must be the personal relationship which is likely to develop, or has developed, between the employee and customer as a result of dealings between them on behalf of the employer and its business.'[22]
26 Two key points emerge from these formulations. First, that an employee must be in a position to gain trust and confidence so as to be relied on in a client's affairs. Secondly, that the relationship between employee and client is such that there is a possibility that if the employee leaves the business of the employer he or she may carry away the client's business with them.
27 There is no real dispute between the parties that these are the relevant principles with one exception. During oral submissions counsel for Mr Pickett submitted that it needed to be shown that there was a risk that the employee would deliberately use their influence, and that merely to have acted unknowingly, such as by demonstrating their knowledge and ability to the client, was not enough to amount to 'influence'. We reject this submission. It is not reflected in the cases, especially those which do not concern solicitation, where the influence in question can arise from attraction or attachment to, or fondness for, the employee rather than a conscious and deliberate attempt by the employee to manipulate the client. For example in Woodmason's Melrose Dairy Pty Ltd v Kimpton the Full Court held:
There are many methods of enticing away customers beside the method of direct solicitation impossible of detection, and only known by results. But, apart altogether from any conscious exercise by the former employee of such knowledge and influence as he may have acquired in his former employment, the employer is entitled to protect himself against loss which may otherwise arise from the mere existence of a personal relationship between his customers and his former servant.[23]
28 Similarly, in Koops Martin v Reeves, after considering all the relevant authorities, Brereton J put it thus:
The validity of a restraint is judged at the time at which the contract is made, and having regard to what it entitled or requires the parties to do as distinct from what they intend to do or have actually done. As the parties have to turn their minds as to what is reasonable at the time when the restraint is created, some allowance must be made for potential developments in the role of the employee and the nature of the business for which he or she might be responsible in the future. [24]
29 It is also clear that the various formulations go the risk or possibility rather than certainty, likelihood or probability. The NSW Court of Appeal held in Jardin v Metcash Ltd:[25]
[97] These statements are not, however, to be understood as requiring that the employee be proved to be in a position to control whether the customer remain with or leave the business. The employer is entitled to protection against the use of 'personal knowledge of and influence over' its customers, which the employee might acquire in the course of his or her employment, so as to undermine its customer connections: Herbert Morris Ltd v Saxelby [1916] 1 AC 688 at 709; Lindner v Murdock's Garage [1950] HCA 48; (1950) 83 CLR 628 at 635, 636, 645, 647 and 654; [1950] HCA 48; [1950] ALR 927 at 929-30, 930, 935-6, 936-7 and 940-1 (Lindner). It is against the 'possibility' of its business connection being adversely affected by the use of that 'personal knowledge and influence' that the employer is entitled to be protected: Lindner at CLR 636, 645 and 654; ALR 930, 935-6 and 940-1.
30 DWS submitted that the trial judge misdirected himself when drawing conclusions from the authorities and misapplied the principles to the facts.
31 In particular, DWS submitted that the trial judge erred in finding there was no legitimate interest on the basis that Mr Pickett was not intended or contemplated to have the relevant and necessary control over Grocon's business and was not intended to become the human face of the business.[26] DWS further submitted that the trial judge's use of 'strong connection' and 'significant degree of influence' when summarising the relevant cases[27] shows that his Honour thought the principles required more than they did and something akin to actually controlling the customers' business as his own. Finally DWS submitted that the trial judge applied the wrong test by referring to the 'special category that would require a risk of exploitation'.[28]
32 These submissions have merit in part. The relevant question is not whether the parties intended Mr Pickett to control Grocon's business or to become the human face of DWS for Grocon, but rather whether the nature of Mr Pickett's employment and relationship with customers gave rise to a risk that this would happen. Moreover, the very presence of a restraint clause in the contract demonstrates that the parties contemplated such a thing might occur.
33 It may be the case that when the trial judge used the terms 'strong connection' and 'significant degree of influence' his Honour was merely trying to describe something akin to 'a strong-enough connection' and 'enough influence over the client to allow them to attract their business' yet, it is unclear. In our view, there is no significance to his Honour's use of the term 'special category'; such categories are indeed special, in the sense of being particular, specific or otherwise different from what is usual.
34 The assessment of whether a legitimate interest exists is to be assessed at the time the contract is being entered into. The finding of the trial judge that the services Mr Pickett was performing at Grocon were the same as anticipated was not challenged. Therefore, one can extrapolate, at least to a degree, from Mr Pickett's role at and relationship with Grocon so as to draw conclusions about what was anticipated at the time of Mr Pickett's employment contract, in addition to consideration of information already provided about what the parties expected to occur in the course of a typical consultancy assignment.
35 As well as the evidence we have already referred to, there were powerpoint slides tendered as part of the powerpoint presentation made to new employees of DWS:
• The slide 'Client relationships' states 'Perception is reality; Establish what the client wants and needs; Actively seek out opportunities to exceed the client's expectation by providing a value added service; inform the client of all the products and services DWS offers; Involve yourself at the client site.'
• The slide 'What is a consultant?' says 'At DWS our Consultants provide solutions to our Clients and help them to make well informed decisions about their business.'
• The slide 'Exceed expectations' states 'Exceeding the client's expectations is what sets us apart from our competitors. You can add value in the following ways: Willingness to be flexible, Communicate & engage, Pass on opportunities to Business Development, Utilise SpinnakerOne where possible, Participate in DWS initiatives.'
• The slide 'Proactive approach' states 'Participate in DWS & client activities'.
• The slide 'Quality Focused' states 'Read between the lines, listen carefully to requirements, ask questions, clarify'.
36 Mr Pickett's position description defines his role as to 'Consult on technical matters as described in the assigned proposal or project' which may include recommending equipment and services. His annual review document describes his role as providing technical leadership on various matters, project managing, evaluating and selecting vendor packages and evaluating vendor proposals.
37 During the trial the following exchange occurred:
Counsel: And in fact what happened is Grocon and Ms Brockett in particular came to appreciate the range of your experience and skills and came to rely on you in a variety of different circumstances where what you had to contribute was needed by the company?
Mr Pickett: I was indeed a key member of the team.[29]
38 There was some other evidence relating to Grocon employees' opinions of Mr Pickett and his performance which those employees did not remember or otherwise denied as saying.[30] The trial judge did not draw any conclusions regarding that evidence. It is unnecessary to give this further regard.
39 Many factors have been identified in the authorities to identify and distinguish situations where a legitimate interest in protecting customer connection may arise and those where it will not.
40 In this case, in sum, the following factors support a finding of legitimate interest:[31]
(a) Mr Pickett's services were the main part of the transaction between Grocon and DWS (DWS delivered its services through the agency of consultants);
(b) Mr Pickett's contact with Grocon took place at Grocon premises (Consultants would generally provide services at customer premises);
(c) Mr Pickett was skilled and not merely a subordinate working under another's supervision;
(d) Mr Pickett was working closely with Grocon for a long time;
(e) Mr Pickett was in frequent, face-to-face contact with Grocon employees;
(f) It was usual for consultants to work in a team with a project leader or manager. Each consultant would work in their individual field of expertise;
(g) Consultants could work individually without a project leader or manager;
(h) Although assignments could be short, they could go for some months;
(j) Grocon asked Mr Pickett to be their new IT manager;
(k) There was no significant interaction between Grocon and DWS during the 11 months Mr Pickett was working at Grocon;
(l) DWS employees were encouraged to become involved at the client site, participate in client activities, to inform the client about DWS products and services, to pass on opportunities to business development, to exceed client expectations and to help clients make well informed decisions about their business;
(m) Mr Pickett became a 'key member' of the team at Grocon.
41 Counsel for DWS submitted that it was open to conclude:
(n) Consultants will almost inevitably become familiar with, and knowledgeable about, the IT requirements and systems installed and operated by DWS clients.
(o) Consultants have the opportunity, by seeing and working with them on a regular basis, to develop a close working relationship with the relevant IT and computing staff employed by the client.
42 Mr Pickett relied on the following matters in support of there being no legitimate interest:
(a) DWS' clients were large companies and consultants would only be providing one part of their work (in Mr Pickett's case - IT support);
(b) DWS was a large company employing over 500 consultants;[32]
(c) DWS' business development team stayed in contact with Grocon during Mr Pickett's consultancy;[33]
(d) Negotiation of the contract between DWS and Grocon which included the price and the scope of the consultant's work did not involve Mr Pickett;
(e) Terms and conditions of the contract could be altered from time to time;
(f) DWS would have replaced Mr Pickett if Grocon was not satisfied with his work;
(g) Mr Pickett reported back to DWS about his work at Grocon via email and meetings;
(i) The project-based scope of the consultancy work;
(j) The more frequent or usual practice of DWS was to send out consultants as part of a team with a project manager or leader.
43 Counsel for Mr Pickett specifically drew our attention to the conclusions that:
(k) Mr Pickett's lack of knowledge about the business and financial relationship and dealings between DWS and clients meant that it would have been harder for him to compete with DWS;
(l) The nature of DWS' clients - large companies seeking consultancy services - would counter any finding that a consultant could influence a client to such a degree that they could take their business with them, and only a large consultancy company could compete with DWS.
44 Counsel for Mr Pickett also used Grocon as an example of the last proposition, highlighting that Grocon decided to stop consulting and restructure without consulting Mr Pickett[34] and indicated that if Mr Pickett was unavailable to be IT manager they would recruit someone else.
45 In our view none of the above factors is decisive. Some of these factors will carry more weight than others depending on the nature of the business and the scope of employment. It seems to us that DWS has discharged its burden of demonstrating a legitimate interest.
46 Counsel for Mr Pickett is correct in pointing out the unlikelihood of a large business ending the practice of hiring IT consultants through DWS after being solicited, or seeking out advice, from one such consultant. Nevertheless there is a real possibility that the decision of a client to stop consulting and hire a permanent staff member will be influenced by the knowledge that someone already exists who has an established ability, an intimate knowledge and familiarity with their system and fits in well with the business to take on such a role or train a replacement. It might also be relevant to their decision that they could 'lose' such a valuable person through re-assignment within DWS.
47 Moreover, such a scenario is not the only risk that needs protection against. The assessment must be based on possibilities arising at the beginning of the contractual relationship. To provide a few examples, it is possible that a consultant who tires of DWS and joins a new consultancy firm will influence the client to hire the new firm in order to retain the same consultant. The situation of highest risk will be in situations where the client only relies on one consultant employee, working alone, and not in a team, and on a specified, well-defined, project. Should such an employee decide to set up business on their own, a client might well be persuaded to directly hire the employee to complete the project, or related projects.
48 Counsel for DWS submitted that the role of their IT consultants is analogous to that of accountants in accounting firms, as described in Birdanco.[35] We would hesitate to put it that highly, especially given the fact that it was more usual for DWS consultants to work as part of a team, or to generalise about IT consultants across the field.
49 Assuming there was a legitimate interest justifying a restraint of trade, the next question is whether the clause did no more than was reasonably necessary to protect that legitimate interest.
The duration and extent of the restraint clause
51 Before looking at the restraint clause specifically, we will note the following matters which we find to be particularly relevant under the circumstances of this particular case.[38] First, DWS submitted, and it was not disputed, the reference to 'client' in the restraint clause is not directed to legal persons but the specific business or organisation unit to which services were provided. We take this to mean that if a service was provided to a specific project, division or section of an organisation only, then the restraint of trade clause would not prevent an employee from providing services to other projects, divisions or sections within the same organisation. Given the size and scope of some of DWS' clients, this is an important and significant restriction built into the clause and also aids in certainty.
52 Secondly, in principle, a restraint clause that goes beyond solicitation, such as accepting a customer's offer, may be reasonable where there is a strong customer connection and solicitation might not be necessary (for example, the customer might approach them).[39]
53 Thirdly, the more significant the personal relationship between the employee and customers is to the finding of legitimate interest, the less likely it is that a restraint will be found reasonable if it relates to customers whom the employee did not deal with.[40]
54 The principles as to how to determine a reasonable duration for a restraint clause are uncontroversial and not in dispute. The matter is not one that is capable of being settled by direct evidence.[41] An opinion 'can only be formed on a broad and common sense view' after informing oneself fully of 'the facts and circumstances relating to the employer's business, the nature of the employer's interest to be protected, and the likely effect on this of solicitation'.[42]
55 The relevant question, as noted by the trial judge, is:
what is a reasonable time during which the employer is entitled to protection against solicitation of clients with whom the employee had contact and influence during employment and who were not bound to the employer by contract or by stability of association?[43]
56 The question has also been reformulated as the length of time it would have taken a reasonably competent replacement employee to show their effectiveness and establish a rapport with the client, displacing the former employee's influence with the client[44] or as how long the employee's hold over the client is expected to last before weakening.[45]
57 Mr Pickett worked at and interacted with Grocon and its employees daily for many months and therefore it would be reasonable to expect some lasting attachment. However, the more important a role, the more quickly one would expect an organisation to be content to 'move on' with another employee if the person they had a connection with was unavailable out of necessity. Similarly, any theoretical replacement of Mr Pickett's appointed by DWS would be performing the same important role and interacting with Grocon employees daily and at Grocon premises. Under those circumstances an employee has a greater opportunity to demonstrate competence and establish a rapport with a client than it would in occupations and circumstances where interaction with an employee was more sporadic or infrequent, or only for short periods, or might involve only one task at a time, or where it would take more than a short length of time to assess the full impact of the employee's work. Thus one would expect a new attachment, displacing the old, to form comparatively more quickly.
58 Exploring other possibilities arising out of the contract, counsel for Mr Pickett submitted that in situations where the work was more project-based, if a consultant were to leave a project, for example for six months, it was unlikely the consultant would remain of use as the project and the scope of its works would have changed or the project ended. This would be due to the projects being worked on being provided in a dynamic area of IT services. We also observe that in situations where an employee is working as part of a DWS team, one might expect their influence with a customer to be diluted and this would affect the length of time one would expect their influence to last before waning and the relationship's susceptibility to replacement.
59 As the Western Australian Court of Appeal has held, a further consideration is that
[a]s the authorities demonstrate, the restraint must be reasonable in relation to the party restrained in the sense that it preserves that party's fullest liberty of action consistent with what is necessary for the adequate protection of the restraining party. It is not an error to focus on what was reasonably necessary for the protection of the [employer]. However, that assessment ordinarily includes consideration of the nature and extent of the impact of the restraint on the party who is restrained. [46]
60 As such, enquiries are usually made as to the size of the business, number of customers, geographical area and effect on solicitation.[47] Area and time are usually bundled together; the more area the restraint covers, the less time would be considered reasonable.[48] Analogously, the more clients in the field that an employee is prevented from working with, the less time would be considered reasonable.
61 An appropriate length of time may be related to whether the industry or business in question is subject to a high level of technical innovation and whether that business operates in such a way that greater emphasis is placed on efficiency and service or any particular personality or skill.[49]
62 DWS submitted that the relationship of a DWS IT consultant is analogous to the one found in Birdanco between accountant and client. DWS submits that in these types of professional relationships a year is not very long to have the influence of the employee wane. Given that a three year restraint in Birdanco was found to be reasonable, 12 months is plainly within the reasonable period.
63 A comparison with other situations where a restraint of trade has been found to be reasonable is necessarily limited. Each situation has its own unique set of facts and the restraints in question will be different. For example, unlike in this case, the restraint clause in Birdanco did not absolutely prohibit the trainee accountant employee from performing work for clients or former clients of his employer to whom he had previously provided services, but imposed liability to pay a certain amount in damages if he did so. The customer connection that usually arises between accountant and client is one that is shaped, at least in part, by their ongoing and continuing relationship, which potentially spans many years, is regularly repeated and concerns substantially similar work and affairs each time it arises. This does not closely parallel the types of relationships potentially arising between a DWS IT consultant and a DWS client.
64 In light of the factual findings made by the trial judge, set out above, the further information before us and the scope of the restraint (including, both the first limb alone or the first and second limb together) DWS has failed to persuade us that the trial judge erred in his finding. It follows, in our view that the restraint clause is invalid.
65 Additionally, if it were necessary to do so, we would have found that the duration of the restraint in relation to the first limb standing alone was longer than was reasonably necessary for the protection of DWS' legitimate interest.
66 We turn to consider whether the restraint clause does more than was reasonably necessary to protect DWS' legitimate interest with regard to its extent.
67 The trial judge found that even if a legitimate interest existed, the second limb of the restraint clause was unreasonable. That was the limb preventing Mr Pickett from providing services, or accepting any request to provide services, to any client of DWS to which he had cause to be in contact with during the normal course of his provision of services to DWS clients. His Honour found that it was so because '[s]uch a relationship would not provide an opportunity for a close connection and exploitation of the relationship, the very matters that underpin the need for protection'.[50]
68 The difference between the nature, quality and extent of the contact between the types of clients addressed in the two limbs is self-evident.
69 There appeared to be no dispute between the parties that, should a legitimate interest be made out, the first limb of the restraint clause (directed towards clients to whom Mr Pickett actually provided services) was reasonable.[51]
70 Counsel for DWS argued on appeal that the second limb was justified as it was directed towards the same risk and possibility that the first limb was directed towards. Counsel emphasised that it was necessary to look at the position when the contract was entered into and the anticipated risks and possibilities as opposed to certainties.
71 During oral submissions before us, counsel conceded that it was both less likely and less clear that risk existed in relation to the clients described in the second limb. Counsel also conceded that there was no evidence that Mr Pickett, in the environment of providing services to a particular client might have occasion to contact another client of DWS in such a manner as to make the restraint reasonable. Prima facie, there is no evidence of any close and personal contact of the sort giving rise to the legitimate interest arising in relation to clients to whom an employee might be directing services. Additionally, this is not the type of situation where the scope of the restraint could be extended on the basis that an employee has necessarily acquired influence or special knowledge over the employer's clientele. DWS consultants do not, for example, hold relevant positions of seniority within the organisation nor is their role to obtain and extend custom for the employer's business.[52]
72 DWS has not made out its burden and we could not conclude that the second limb of the restraint clause was reasonable. As such, it is contrary to public policy and this is enough to render the clause void. Had the extent of the restraint clause consisted only of the first limb, we would have found it reasonable in its extent (but not its duration). However, for the reasons that follow, we would also decline to sever the second limb of the restraint clause.
73 DWS raises as a ground of appeal that the second limb of the restraint clause may be severed. Mr Pickett opposes the raising of the argument.
74 It is a general rule that parties are not permitted to pursue arguments on appeal that were not run below because
[i]t is fundamental to the due administration of justice that the substantial issues between the parties are ordinarily settled at the trial. If it were not so the main arena for the settlement of disputes would move from the court of first instance to the appellate court, tending to reduce the proceedings in the former court to little more than a preliminary skirmish.[53]
75 Permitting the running of a new argument under such circumstances therefore 'not only undermines the respective functions of the trial and appellate courts and the policy of law but perhaps more importantly it deprives the appellate court of the benefit of the views of the trial court.' [54]
76 A consideration of whether the new argument should be entertained raises issues concerning:
the finality of litigation; the difficulty of inducing an appeal court to consider new facts; the undesirability of encouraging tactical decisions not to present an issue at first instance: keeping it in reserve for appeal; and the need for vigilance to avoid injustice to a party having to meet new facts and new issues of law for the first time at the appeal court.[55]
77 Exceptional circumstances may arise where it would not be contrary to principle to entertain the point.[56] A point will not be entertained when 'evidence could have been given there which by any possibility could have prevented the point from succeeding'.[57] However, if 'all facts have been determined beyond controversy or the question is one of construction or law and it is expedient and in the interests of justice to entertain the point, a party may ... take a point for the first time on appeal.'[58]
78 DWS submitted that the issues pertaining to severance do not require the calling of any new evidence and that it is a purely legal step. Counsel for Mr Pickett submitted that he could identify the possibility that evidence could have been lead on the issue of Mr Pickett's contact with clients outside of the provision of services to them.
79 Nevertheless, it is difficult to see how evidence on the issue of Mr Pickett's contact with clients outside of the provision of services would have been relevant to whether the second limb of the restraint clause was severable, as opposed to merely going towards whether the second limb did more than what was reasonably necessary. Moreover, counsel for Mr Pickett appear to have conceded that, subject to its length, the first limb of the restraint clause would be reasonable.
80 The argument being raised before the court seems to be a purely legal question. Furthermore, DWS submitted, it is an 'exceptional circumstance' in this case that as the trial judge found DWS did not have a legitimate interest, and also that the duration of the restraint was unreasonable, any findings as to the reasonableness of the extent of the restraint clause did not form part of the ratio decidendi of the decision and thus the trial judge would not have been required to consider severance.
81 We note that had his Honour considered the matter of severance, his conclusions would not necessarily have formed part of the obiter dicta of his Honour's decision. Had his Honour concluded that severance was not possible then that would have been part of the reason to hold that its extent was unreasonable. The finding that the extent of the clause was unreasonable was another reason for finding the clause was invalid, a reason that was independent and free-standing from the finding that there was no legitimate interest. Thus it formed an independent ratio decidendi.[59]
82 As we say, the matter does appear to be a purely legal one. It is therefore necessary to examine whether it is expedient and in the interests of justice to allow the argument to be made.
83 DWS conceded that, at trial, a forensic decision was consciously made not to ask the trial judge to consider severing the second limb of the restraint clause.[60] DWS submitted that there was little difference between cases where a deliberate forensic decision was made not to pursue an argument and a case where a legal argument was merely not considered or pursued.
84 We reject the submission. The principles constraining the running of new points on appeal apply 'with even stronger force' when that point was expressly abandoned at trial.[61]
85 Nor is this a case similar to The Pilbara Infrastructure Pty Ltd v Australian Competition Tribunal[62] where the High Court allowed a party to introduce for the first time an argument not run below despite the parties having acquiesced and encouraged the impugned approach because the question went 'to the root of the [subject] judicial review applications' and was necessary for the Court's decision.[63]
86 In Commissioner of Taxation v Linter Textiles Australia Ltd (In Liquidation), Kirby J said:
there are times when considerations of procedural fairness demand that a party, with an apparently good legal argument, be prevented from relying on it, with adverse consequences as the result. Such instances should, in my view, be regarded as exceptional. At least this should be so where all that is involved is the application of a legal text to facts found or admitted.[64]
87 In Banque Commerciale Mason CJ and Gaudron J observed that the rule may be related to estoppel by election in the conduct of litigation and as a result that 'the relevant consideration is not that the other party is put in a worse position but that he or she may have been so placed.'[65] In Geelong Building Society v Encel[66] Tadgell J considered it relevant that, should the appellant succeed on the new point on appeal, the respondent would be liable for significantly more interest than he would have been liable for if he had failed at first instance. Thus his Honour said:
[it was] plain that the respondent would be placed in a markedly worse position than if the reply had been properly framed in the first place...[and] to allow the amendment now sought would be to put the respondent at risk of incurring a very large extra liability without having an appropriate opportunity to consider avoiding it by way of compromise or other means.[67]
88 Counsel for Mr Pickett submitted that it was relevant that this was a case concerning a negative injunction, that justice required all points to have been settled at trial and that the decision affects Mr Pickett's ability to earn a living, and by extension affects his family. The persuasive point was made that it seems extremely unlikely that Mr Pickett would be able to find other employment in the time between the finalisation of this appeal and the expiration of the twelve month period stipulated in the restraint clause. The chances of him doing so would have been far improved at the time the trial judge was asked to make the decision. In our view, an injustice would be rendered to Mr Pickett if DWS was permitted to run the new point.
89 For these reasons we would not allow DWS to raise the argument that the second part of the restraint clause was severable.
90 Furthermore, we observe that the Civil Procedure Act 2010 is part of an attempt by the Parliament 'to ensure the appropriate use of the court system by litigants and to prevent the wastage of court resources through inefficient processes'.[68] The Civil Procedure Act provides that the overarching purpose of that Act and the Rules of the Court 'is to facilitate the just, efficient, timely and cost-effective resolution of the real issues in dispute.'[69] Quite plainly, raising new arguments on appeal, which could and should have been raised before the trial judge, runs counter to this purpose. It inconveniences the other party, the client, other litigants and the Court of Appeal itself. '[R]esolution of disputes serves the public as a whole, not merely the parties to the proceedings' and a 'just resolution' to a case requires consideration of its timely disposal, the question of costs, waste of public resources and strain and uncertainty on the parties.[70] It also runs counter to the overarching obligation of counsel to narrow the issues in dispute.[71]
91 As we have decided that DWS is precluded from making the argument that the second limb of the restraint clause was severable, it is unnecessary to decide whether the impugned part of the restraint clause would meet the test for severance. However, if the argument had been made at trial, we would have found severance to not be permissible for the reasons given below.
92 In theory, if a contract with a severance clause has a restraint clause with a valid term and an invalid term, the invalid term may be severed to make the restraint clause enforceable.[72]
whether the covenantee can enforce the restraining covenant to the extent to which it would have been valid had it been narrowly drafted. The answer is that the covenantee can do so if the parts which are too wide can be removed without altering the nature of the contract and without having to add to, or modify, the wording in any way other than by excision.
94 Thus there are two clear parts to the test. The first is that the impugned part must be capable of simply being removed - as if simply crossed out with a blue pen; a court can remove words from a restraint clause but not rewrite it.[75] Secondly, the part to be severed must be an independent covenant and capable of being removed without affecting the meaning of the remaining part. The only change should be to the sphere of operations of the clause.[76] For example in Attwood v Lamont a restraint of trade clause prevented a tailor from competing with his employer's business in anyway, listing off the various fields of the employer's business. Although the parts of the clause referring to fields other than tailoring were capable of simply being removed, it was held that to do so would change the meaning - when reading the contract as a whole there was only one covenant for the protection of the employer's 'entire business, and not several covenants for the protection of his several businesses' and that the employer is 'but one business' not carrying on several businesses.[77]
95 Clearly, the impugned part of this restraint clause may be simply struck out without changing a word. The real dispute is whether the impugned part is an independent clause whereby removing it would not change the meaning or scope of the remaining part.
96 DWS submitted that the restraint clause meets the test. It submitted that the impugned part has work to do over and above the first half and that the clause divides the clients into two distinct and mutually exclusive and distinguishable groups.
97 Mr Pickett submitted that there was only one covenant, not two independent ones. Mr Pickett submitted that the Court needed to be satisfied that the covenant itself manifested a clear intention that the parties intended the single sentence to be substantially equivalent to two covenants. It was further submitted that the Court could not be so satisfied as the covenant was directed towards Mr Pickett providing services to clients and merely provided a description of two different types of clients. Moreover, cl 24 as a whole was already divided into three subclauses, with sub-cl 24(b) addressing the acceptance of providing services to DWS clients which was an integral restraint standing on its own.
98 Were it necessary to decide, we would have ultimately been persuaded that the restraint clause fails to meet the test for severance. On one view, the clause addresses two distinct (if partially overlapping) groups - the first limb refers to DWS clients to whom specific services were provided by the employee and the second limb clients to whom the employee had contact with during the normal course of their employment. However, it is not, for example, in the form of a list, enumerating the various clients captured by the restraint, each one standing alone. Nor is it in the commonly used form of a cascading clause where it starts with the broadest possible restraint then provides increasingly narrow alternatives, each one standing alone. Instead, the language of the clause is such that the 'alternative' option is not a stand alone option but contains reference to the first option. The clause restrains the provision of services:
to any client of DWS to whom the Employee provided specific services whilst in the employ of DWS or in addition [to that group of clients] any client to which the Employee had cause to be in contact with during the normal course of the Employees provision of services to DWS Clients.
99 In our view, it is therefore impossible to read the second limb of the restraint as separate from the first. It is not an independent covenant. It is an attempt to expand on the first covenant. One could not, for example, sever parts of the restraint clause such that only the clients expressly mentioned in the second limb remained. To read it as an independent covenant, especially in the context of the clause as a whole which is already divided into subclauses, would not reflect its true meaning. It might have well been that the clause could have been written in a form where a restraint against clients with whom the employee had contact was severable. However, this clause is not in such a form.
100 Accordingly, we consider it plain that the clause does not contain two separate covenants. Therefore, were it necessary to decide, we would have found that the second limb of the restraint clause was not severable.
101 In summary, even if the argument had been made at trial, nonetheless we would have held that the second limb of the restraint clause was not severable. Moreover, even if it had been severable, the duration of the restraint clause would have still been longer than reasonably necessary to protect DWS' legitimate interest and thus, the restraint clause would have nevertheless been found invalid.
103 I have had the advantage of reading in draft the reasons of Warren CJ and Davies AJA and agree that the appeal should be dismissed.
104 I agree with Warren CJ and Davies AJA that the trial judge erred in concluding that the appellant did not have a necessary legitimate interest which would justify the imposition of a restraint of trade clause.
105 It was not in issue that the appellant's business was delivered through computer consultants, such as the respondent, to business customers at the customer's premises. The consultant could work within a team of the appellant's consultants or on their own and would become familiar with the IT requirements of the customer. The consultant would have the opportunity to develop a close working relationship with the employees of the customer. The consultant could be required to work for a continuous and lengthy period at the customer's premises enabling the customer and its employees to develop trust and confidence in the consultant.
106 It was also not in dispute that the nature of the consultancy work undertaken by the respondent in the last twelve months of his employ at the premises of Grocon Pty Ltd was work of the type contemplated at the time the employment agreement between the appellant and respondent was entered into in 2007. In the extended period during which the respondent remained working with Grocon he provided technical and process support to the IT manager, reviewed and improved Grocon's network configurations, worked with the Grocon IT team and prepared for the implementation of IT changes to their operation and processes.
107 The appellant was exposed to considerable risk as its consultants worked closely with their customers at the customer's premises for protracted periods, and in conditions of some confidentiality. The consultant's services would likely be the primary part of the appellant's customer connection. The appellant was entitled to protection against the use of that personal knowledge of and influence over its customers, which the consultant might acquire in the course of his employment, so as to undermine the appellant's customer connections. The risk was appreciable that their consultants might use that relation of influence for their purposes as distinct from those of the business.[78] It is against the 'possibility' of its business connection being adversely affected by the use of that 'personal knowledge and influence' that the employer was entitled to be protected.
108 I do not regard the duration of the restraint clause of one year to be unreasonable. The restraint clause is relatively narrow. It does not prevent the respondent from going into business as a computer consultant. The limitation on his provision of IT services does not extend to the entire client base of the appellant. The restraint is limited to the provision of IT services to those particular customers of the appellant with whom the respondent in the course of his employment with the appellant - and by virtue of the opportunity which that employment offered him - was able to pursue a continuing relationship. But the risk which existed was significant. The appellant's customer connection was primarily through one or more of its consultants. The consultant had the opportunity to develop a personal relationship with the customer and its staff and to acquire a detailed knowledge and understanding of the customer's IT needs and affairs. Those things make it attractive to the customer to leave the appellant when the consultant leaves, in order to be able to maintain that relationship and take advantage of that accumulated knowledge and understanding. Accordingly, I infer that one year is a necessary and reasonable time to allow for a sufficient decline of the influence of the relationship between consultant and customers and to allow for an effective replacement consultant.[79]
109 However, I agree for the reasons given by Warren CJ and Davies AJA that clause (b) was unreasonable and that the second limb of clause (b) was not severable from the first. The appellant has not discharged the onus of establishing that severance is appropriate. The appellant, having made a forensic decision to rely upon the clause in its entirety and eschew severance when it was raised by the trial judge, should not be permitted to do so for the reasons given by the Chief Justice and Davies AJA.
110 Further, the courts have strictly circumscribed the circumstances in which severance should be undertaken in the context of employee restraint covenants. This stricter approach, as Dodds-Streeton J observed in IF Asia Pacific Pty Ltd v Galbally,[80] cautions against curial disentanglement of unreasonably wide clauses, recognising that they may act in terrorem by exposing employees to the threat of litigation. A too ready judicial willingness to save such clauses by severance would, as her Honour rightly observed, also reduce the sanction of invalidity otherwise applicable to employers who attempt to impose unjustifiably wide restraints. Where an employer has sought to burden its employee with a patently unjustifiable restraint, there should be a marked reluctance by the courts to allow the employer a belated revision of the condition, only when it has become apparent that the condition is likely to be struck down because of its unreasonable reach. This was such a case.
[14] Lindner v Murdock's Garage [1950] HCA 48; (1950) 83 CLR 628, 633-4 [6]-[8] (Latham CJ) ('Lindner'); Koops Martin Financial Services Pty Ltd v Reeves [2006] NSWSC 449 [29] ('Koops Martin'); Pierson v HX Holdings [2012] FCAFC 111 [46].
[15] Woodmason's Melrose Dairy Pty Ltd v Kimpton [1924] VicLawRp 78; [1924] VLR 475, 480-1 ('Woodmason's Melrose Dairy'), cited with approval in Lindner [1950] HCA 48; (1950) 83 CLR 628, 654 [8] (Kitto J).
[16] Lindner [1950] HCA 48; (1950) 83 CLR 628, 636 [10] (Latham CJ) cited with approval in Birdanco Nominees Pty Ltd v Money [2012] VSCA 64 (Robson AJA) ('Birdanco').
[17] J D Heydon The Restraint of Trade Doctrine (3rd ed, 2008, Lexis Nexis Butterworths) 26-7. Cited in Birdanco [2012] VSCA 64, [46] (Robson AJA).
[18] Arthur Murray Dance Studios of Cleveland Inc v Witter (1952) 105 NE 2d 685, 706 (Ohio, CP, 1952) (Hoover J), cited with approval by J D Heydon, 122 and Birdanco [2012] VSCA 64, [46].
[19] Jardin v Metcash Ltd [2011] NSWCA 409; (2011) 285 ALR 677, 696 [96] (Meagher J, Campbell and Young JJA agreeing) ('Jardin').
[20] Koops Martin [2006] NSWSC 449 [34]; Cactus Imaging Pty Ltd v Peters [2006] NSWSC 717; (2007) 71 NSWLR 9, 17 (Brereton J); Informax International Pty Ltd v Clarius Group Limited [2011] FCA 183 (Perram J).
[21] Cactus Imaging [2006] NSWSC 717; (2007) 71 NSWLR 9, 17.
[22] Jardin [2011] NSWCA 409; (2011) 285 ALR 677, 696 [95] (Meagher J, Campbell and Young JJA agreeing).
[23] [1924] VicLawRp 78; [1924] VLR 475, 480 (Schutt, Mann and MacFarlan JJ). Cited with approval in Lindner [1950] HCA 48; (1950) 83 CLR 628, 654 [8] (Kitto J).
[24] [2006] NSWSC 449 [53].
[25] [2011] NSWCA 409; (2011) 285 ALR 677, 696-7 [97] (Meagher J, Campbell and Young JJA agreeing) (emphasis added).
[29] Trial transcript 28 February 2012, p 95.
[30] For example a performance evaluation of Mr Pickett by Ms Brockett and an Affidavit of Mr Armstrong.
[31] See, eg, the types of factors discussed in Hartleys Ltd v Martin [2002] VSC 301 [116] (Gillard J); Koops Martin [2006] NSWSC 449 [34]-[35] (Brereton J); Cactus Imaging [2006] NSWSC 717 [25] (Brereton J); J D Heydon 122-7; Birdanco [2012] VSCA 64 [36]-[46]; Twenty-First Australia Inc v Shade (unreported, NSWSC, Young J, 2428 of 1998, 31 July 1998), [7]-[8].
[32] Trial Transcript 35, affidavit of Mr Armstrong.
[33] Email from Ms Zanota to Ms Brockett, dated 21 March 2011, which also included an invitation to meet and potentially to discuss Mr Pickett. There was also the evidence of Mr Armstrong that the business development team would build relationships with current clients.
[34] As well as evidence to this effect, Counsel referred to evidence in Grocon's budget that Grocon was planning to stop using IT consultants from at least about March 2011.
[35] Birdanco [2012] VSCA 64, [42], [43].
[36] Amoco Australia [1973] HCA 40; (1973) 133 CLR 288, 305 (Walsh J).
[37] Ibid (McTiernan A.C.J., Menzies, Walsh, Gibbs and Stephen JJ).
[38] There are of course many other factors which may go towards reasonableness but of which no evidence was presented, for example, general acceptance in the industry, profession or trade of restrictions of the type being considered.
[39] Koops Martin [2006] NSWSC 449 [82]-[85] (Brereton J).
[40] Koops Martin [2006] NSWSC 449 [34]-[35] (Brereton J); Cactus Imaging [2006] NSWSC 717; (2007) 71 NSWLR 9 [25] (Brereton J). This is less so where the employee was in a role of influence or special knowledge (for example they hold a senior role in the company) but that is of course not the case here.
[41] Stenhouse Australia Ltd v Phillips [1973] UKPC 1; [1974] AC 391 ('Stenhouse').
[43] Ibid 402 cited in approval in Birdanco [2012] VSCA 64, [81].
[44] Koops Martin [2006] NSWSC 449 [88] (Brereton J); Cactus Imaging [2006] NSWSC 717; (2007) 71 NSWLR 9 [36] (Brereton J); Stacks Taree v Marshall (No 2) [2010] NSWSC 77 [1] (McDougall J).
[45] Cactus Imaging [2006] NSWSC 717; (2007) 71 NSWLR 9 [36]; Stacks Taree v Marshall (No 2) [2010] NSWSC 77 [82]-[83]; Birdanco [2012] VSCA 64, [82], J D Heydon, 169.
[46] Ausdale Enterprises Pty Ltd v Sandford [2006] WASCA 191 [36], (McLure JA, Steytler P and Buss JA concurring).
[47] See, eg, Dowden & Pook Ltd v Pook [1904] 1 KB 45; Lawson Pneumatic Tube Co v Phillips (1904) 91 LT 363; Stenhouse [1973] UKPC 1; [1974] 1 All ER 117, 123.
[48] See, eg, Dewes v Fitch [1920] 2 Ch 159, 179-80 (Lord Sterndale MR).
[49] Synavant Australia Pty Ltd v Harris [2001] FCA 1517 [87] (Emmett J).
[51] In both written and oral submissions counsel for Mr Pickett only argued that the restraint remained unreasonable in its duration if the severance was allowed.
[52] Stenhouse [1973] UKPC 1; [1974] AC 391; Cactus Imaging [2006] NSWSC 717; (2007) 71 NSWLR 9 [33].
[53] Coulton v Holcombe [1986] HCA 33; (1986) 162 CLR 1, 7 ('Coulton').
[54] Port of Melbourne Authority v Anshun Pty Ltd [1981] HCA 45; (1981) 147 CLR 589.
[55] University of Wollongong v Metwally (No 2) (1985) 59 ALJR 481, 483 ('University of Wollongong').
[57] Suttor v Gundowda Pty Ltd [1950] HCA 35; (1950) 81 CLR 418.
[58] Banque Commerciale SA En Liquidation v Akhil Holdings Ltd [1990] HCA 11; (1990) 169 CLR 279, 284 (Mason CJ, Gaudron J) (emphasis added). See similarly Teoh v Minister for Immigration, Local Government and Ethnic Affairs [1994] FCA 1017; (1994) 49 FCR 409, 416 [200] (Lee J); Commissioner of Taxation v Linter Textiles Australia Ltd (In Liquidation) [2005] HCA 20; (2005) 220 CLR 592 [200]-[201]. The earlier position may have been somewhat different, with the Courts assuming that it will be competent and expedient in the interests of justice to entertain the argument if it concerns a question of law 'upon the construction of a document, or upon facts either admitted or proved beyond controversy': Connecticut Fire Insurance Co v Kavanagh (1892) AC 473 480 (Lord Watson, others agreeing?); Sutton; O'Brien v Komesaroff [1982] HCA 33; (1982) 150 CLR 310, 319 (Mason J); Coulton [1986] HCA 33; (1986) 162 CLR 1, 7; Water Board v Moustakas [1988] HCA 12; (1988) 62 ALJR 209, 211 (Mason CJ and Wilson, Brennan and Dawson JJ).
[59] See Harris v Digital Pulse Pty Ltd [2003] NSWCA 10; (2003) 56 NSWLR 298, 293 (Heydon JA) and the cases there cited.
[61] Trans Petroleum (Australia) Pty Ltd v White Gum Petroleum Pty Ltd [2012] WASCA 165 [101]. The Court went on to observe that this particularly the case where the issue was one of fact or a mixed one of law and fact.
[64] [2005] HCA 20; (2005) 220 CLR 592 [201].
[65] Banque Commerciale SA En Liquidation v Akhil Holdings Ltd [1990] HCA 11; (1990) 169 CLR 279, 284 (Mason CJ, Gaudron J).
[67] Geelong Building Society (In Liquidation) v Encel [1996] VicRp 44.
[68] Explanatory Memorandum, 1. See also Second Reading Speech, Legislative Assembly (Attorney-General, Mr Rob Hulls, MP) 24 June 2010, 2606-7.
[69] Section 7. See also s 1(c).
[70] Aon Risk Services Australia Limited v Australian National University [2009] HCA 27; (2009) 239 CLR 175 [30], [114] (Gummow, Hayne, Crennan, Kiefel and Bell JJ). See also [3]-[6] (French CJ) and [133]-[134], [156] (Heydon J).
[72] Marquett v Walsh (1929) 29 SR (NWS) 298 (Long Innes J); Barlow v Neville Jeffress Advertising Pty Ltd [1994] TASSC 181; (1994) 4 Tas R 391, 399-400 (Cox J, Green CJ agreeing) and 407 (Slicer J); Attwood v Lamont [1920] 3 KB 571.
[74] The High Court also mentioned two other questions which are irrelevant for our purposes.
[75] Lindner [1950] HCA 48; (1950) 83 CLR 628, 648 (Webb J); Attwood v Lamont [1920] 3 KB 571, 593 (Younger LJ).
[76] SST Consulting Services Pty Ltd v Rieson [2006] HCA 31; (2006) 225 CLR 516 [46] (Gleeson CJ, Gummow, Hayne, Heydon and Crennan JJ). Attwood v Lamont [1920] 3 KB 571 (CA), 577-579 (Lord Sterndale MR), 593 (Younger LJ); Rentokil Pty Ltd v Lee [1995] SASC 5318; (1995) 66 SASR 301.
[77] Attwood v Lamont [1920] 3 KB 571 593 (Younger J).
[78] Lindner v Murdock's Garage [1950] HCA 48; (1950) 83 CLR 628, 635, 636, 645, 647, 654; Jardin and Jardin Investments Pty Ltd v Metcash Ltd and Metcash Trading Ltd [2011] NSWCA 409.
[79] Birdanco Nominees v Maloney [2012] VSCA 64, [10] (Maxwell P),[83] (Robson AJA).
[80] [2003] VSC 192, [201].
# Wallis Nominees (Computing) Pty Ltd
Pickett \[2013\] VSCA 24
(1990) 169 CLR 279
(2011) 285 ALR 677
(1973) 133 CLR 288
(1985) 59 ALJR 481
(1981) 147 CLR 589
(1950) 81 CLR 418
(1994) 49 FCR 409
(1982) 150 CLR 310
(1994) 4 Tas R 391
(2006) 225 CLR 516
(1950) 83 CLR 628
(2007) 71 NSWLR 9
(1986) 162 CLR 1
(2005) 220 CLR 592
(1988) 62 ALJR 209
(2003) 56 NSWLR 298
(2009) 239 CLR 175
(1995) 66 SASR 301