57 In a case involving a threatened breach, it is legitimate to ask what injunction should go in the particular circumstances to enforce the contract. In light of the respondent's recent past conduct as found by Einstein J, and recognising that these findings may be the subject of challenge in a later stage in these appellate proceedings, it is in my view reasonable to enforce cl 10 (if valid) by injunction framed as sought by the appellant.
58 I would reject the respondent's submission that an injunction is unnecessary or inappropriate in light of cl 5.2 of the Service Agreement or the appellant's rights to protect its confidential information directly, as vindicated by Einstein's order 7. I would draw attention to his Honour's finding at J44 that the process models which were forwarded by email to Mrs Olson's computer were but a small portion of a vast amount of information which Mr Olson had available to him on 2 July 2004 concerning Project Mercury.
59 I return then to the question whether such an injunction as sought being consistent with cl 10 although not reaching its outer limits, would contravene public policy (see Orton at 587-8, being the passage quoted above). In my view it would not.
60 My respectful difficulty with the reasoning of the primary judge is that his Honour appears to apply the common law principles hostile to any form of severance that does not involve blue-pencilling. This case strikes me as a classical situation calling for the application of s4(1).
61 Assuming for the sake of argument that the restraint is unreasonable because it is excessive, the proposed injunction meets any concern on that account. A six-month restraint in return for the proffered payment strikes me in any event as fair and reasonable as regards duration, at least within the scope of the injunction sought.
62 Placing oneself in the position of the parties in February 2003 it is, in my view, clear that Woolworths had a properly protectable interest in securing the right to impose a post-employment restraint upon the respondent to the effect that (subject to the "Restraint Payment") he would not become involved or interested in or concerned with a Competitive Business. (Whether the terms of the restraint were unreasonable, thereby attracting resort to s4(1) is another question, not immediately at issue.)
63 "Project Mercury" commenced in late 2002 (J8). The respondent himself attested to its value to the appellant and its superiority over Franklin's capability (J10). By February 2003 the respondent had the status of a highly paid executive, involved with managing the StockSMART project. This position gave the respondent extensive involvement with Project Mercury (see J57, 256, 265(c)). Mr Brookes gave evidence as follows:
Establishment of the Project Mercury Team
• In early 2003, staff within Woolworths were seconded to the Project. Mr Olson was seconded to the position of Program Manager Replenishment, Mercury. The idea was to second the most knowledgeable Woolworths' employees from parts of the business which were relevant to the improvements to the supply chain sought to be achieved by the Project. Mr Olson was appointed because he was regarded as having expertise in replenishment, forecasting and stock flow. Each of these areas of the business was to be effected by the Project.
64 What subsequently happened was, in the circumstances, indicative of the context of what both parties contemplated at the inception of the Service Agreement. The respondent was given access to the policies, details and software referable to the system being developed by the appellant at great expense and for the purpose of giving it market advantage over its competitors in the supermarket and retail industry in New South Wales at least, and in all probability throughout Australasia.
65 In June 2003 the appellant gave a letter to the respondent welcoming him formally into the Mercury program and outlining the terms and conditions of his employment as a result of his selection into that program. In the main, what was stated was the drawing to the respondent's attention of the existing terms and conditions of employment as set out in the Service Agreement (see J50). This letter postdated the entry into the contractual restraint in February 2003. It is therefore of limited utility to the dispute as to the validity of the restraint. The letter was nevertheless a clear reminder of the importance of preserving the confidentiality of the Project Mercury information. This observation is relevant to any argument invoking s106(2) of the Industrial Relations Act concerning unfairness in the performance of the work contract. The letter is also relevant to the exercise of the discretion to grant injunctive relief as sought. (See also the observations of his Honour at J267.)
66 At the trial it became common ground that the information sent by the respondent to his wife's computer was a valuable trade secret of the appellant. Without having to resort to the respondent's conduct as an admission, it is clear that it was the sort of information that a rival enterprise like Franklins might covet. (I am not implying that the evidence suggests any involvement by Franklins in the sending of the e-mails.) The particular information is merely an exemplar of the type of valuable trade secret that Woolworths would have had a legitimate interest to protect, to the knowledge of the respondent, at the inception of the Service Agreement.
67 A recognised method of such protection is the procurement of a restraint upon the employee given access to such information taking up employment with a competitor whom he might be willing to provide with such information. A reasonable employment restraint is easier to enforce than a breach of confidence or breach of copyright claim; it removes the temptation for the former employee to offer and for the new employer to solicit confidential information; and it provides certainty of definition as regards the area of confidential information to be protected. These interests have been judicially recognised (see Littlewoods Organisation Ltd v Harris [1977] 1 All ER 1472 at 1479, 1485, Wright at 333, Kone Elevators at p43,834).
68 This restraint goes beyond a mere covenant against competition. It protects a legitimate interest of the appellant as acknowledged in cl 10(a)(ii) itself. The restraint does not prevent the respondent from earning a living, particularly in light of the provision for Restraint Payment and the capacity of s4(1) to ensure that public policy is not contravened by allowing cl 10 to have unreasonable ambit.
69 The respondent submitted that the restraint in cl 10 was void for uncertainty. It was submitted the restraint required the exercise of discretion of the appellant before it could be known whether it operated and to what area it extended. As at the time the contract was entered into the Court was unable to determine with any certainty whether the restraint will operate or if it does, the duration of the restraint. This submission cannot be accepted. Merely because the appellant has an option to trigger the restraint or the capacity to lessen the twelve-month outer limit of the contractual restraint does not render cl 10 void by reason of uncertainty. Many contractual obligations are of the nature as to confer a right upon one party to the contract to take action within a defined ambit.
70 Nor is cl 10 incapable of a meaning or impossible to apply. Ambiguity is not the same as voidness for uncertainty (see generally Upper Hunter County District Council v Australian Chilling and Freezing Co Ltd (1968) 118 CLR 429 at 436-7).
71 I find it unnecessary to consider the appellant's alternative submission that the restraint was reasonable according to common law principles, having regard to the payment to which the respondent is entitled during the currency of the restraint.
72 I have also found it unnecessary to address the appellant's contractual interpretation argument. It was argued that the Service Agreement had to be construed in the context of its surrounding circumstances, an undoubtedly correct proposition. More controversial was the secondary submission that the apparent breadth of cl 10 (construed literally) was to be read down having regard to the particular position and particular expertise of the respondent at the time when he entered into the Service Agreement and the likelihood that he would seek post-termination employment in a similar job and/or from one of the appellant's major competitors.
73 The circumstances in which a clearly expressed restraint of trade in an employment contract will be read down as a matter of construction at common law, particularly if necessary to avoid invalidity pursuant to the restraint of trade doctrine, are problematic (see Heydon op cit, pp108-112). The problems increase with a standard form service agreement that is designed to apply to a senior executive in a range of positions that he or she might hold in the establishment after the date of the contract. All of these difficulties are avoided by resort to s4 of the Restraints of Trade Act, particularly in the context like the present where the only relief presently claimed is an injunction that will be framed more narrowly than the contractual restraint.
74 The respondent's invocation of s106 of the Industrial Relations Act does not lead to the withholding of injunctive relief. Even if there is jurisdiction in the present case (but cf s108A) I, like Einstein J, can see no basis for its exercise in the present context. The restraint was fair and consistent with the public interest when the Service Agreement was entered into - at least to the extent of the injunctive relief that is proposed. Nothing that occurred at the commencement or during the currency of the employment relationship since February 2003 has made it unfair in the sense of that term as set out in s105. The letter of 24 June 2003 referred to at J50 was a clear and appropriate reminder and warning about the contractual duties of executives.
75 The facts found by the primary judge as justifying summary dismissal were of such a nature that in my view there was no unfairness in exercising that right.
76 I observe that it is common ground between the parties that it is still open to the respondent to agitate on the appeal any rights stemming from s106 referable to the contract of employment and any remedial claims for damages or injunctive relief apart from those addressed in the injunction that this Court is proposing to grant.
77 For these reason I propose the following orders:
1. Order pursuant to Pt 31 of the Supreme Court Rules for the separate decision of the questions raised in grounds 1 and 2 of the Notice of Appeal with Appointment.