Your Nurse Australia Pty Ltd v Carpenter

Background

1. The plaintiff is both a recruitment and labour hire service which provides registered nurses, enrolled nurses and aged care workers to medical and aged care facilities which have a need for short-term staffing.
2. Commencing 29 August 2022, the first defendant was employed by the plaintiff as a team leader (in Victoria) pursuant to the Contract of Employment. The plaintiff recruited the first defendant from England. The first defendant received a loan of $8,000 by way of a relocation package from the United Kingdom to Australia. Whilst there may be a date error in one of the clauses of the Contract of Employment, the first defendant appears to have commenced work with the plaintiff on 29 August 2022, being the same date on which he signed the Contract of Employment.
3. On 24 October 2022, that is, only after two months working with the plaintiff, the first defendant resigned his employment. At least on the plaintiff's case, he did not give notice in accordance with the Contract of Employment.
4. Subsequently, the plaintiff ascertained that the first defendant had commenced work with a competitor, being the second defendant. Indeed, exhibited to the affidavit of Mr Blackman is a screenshot of the first defendant with a photo of him under the banner of the second defendant. The first defendant is described as a principal consultant at the Collar Group. He describes himself as a specialist in medical recruitment working within health care, in particular, for nurses. This is the same work as he was doing whilst he was working for the plaintiff.
5. According to Mr Blackman, who is a director of the plaintiff, at the time that the first defendant resigned his employment with the plaintiff he informed the plaintiff that he did not intend to repay the $8,000 relocation loan. This seemingly caused Mr Blackman to appoint the solicitors for the plaintiff for the purposes of writing to the first defendant reminding the first defendant of his obligations under the terms of the Contract of Employment.
6. On 7 November 2022, the solicitors for the plaintiff thus wrote to the first defendant setting out what the plaintiff maintains are the obligations of the first defendant in respect of repayment of the loan, return of property belonging to the plaintiff, use of confidential information and the restraint on the first defendant.
7. In response on 9 November 2022, the first defendant contacted the solicitors for the plaintiff saying that his lawyers "would be in touch with them soon". The solicitors for the plaintiff wrote a further letter, dated 14 November 2022, to the first defendant again asking that the $8,000 relocation loan be repaid. This must have prompted the first defendant to seek legal assistance as, on 16 November 2022 Chris McArdle of McArdle Legal wrote to the solicitors for the plaintiff on behalf of the first defendant essentially disputing the obligation to repay the $8,000 and referring to s 325 of the Fair Work Act 2009 (Cth).
8. Nothing was said in this email about any restraint or confidential information. The solicitors for the plaintiff then responded to Mr McArdle, on 22 November 2022, in effect pointing out the terms of the contract. No response was received.
9. A further letter was then sent on 8 December 2022, on this occasion referring to alleged breaches of the Contract of Employment in respect of soliciting of customers or clients of the plaintiff. Attached to that correspondence was a draft document said to be "undertakings by Ryan Carpenter". The effect of the correspondence was to request that the first defendant agree to the undertakings not to engage in any conduct which might be a breach of the Contract of Employment. Further, on 8 December 2022, the solicitors for the plaintiff also wrote to the second defendant, again pointing out what they suggested were the obligations of the first defendant under the Contract of Employment.
10. There continued to be correspondence between the parties culminating in a letter from Westmont Legal, the solicitors for the second defendant, disputing that the first defendant was restrained from placing candidates for the second defendant and its clients, irrespective of whether there was any restraint in place in respect of the clients of the plaintiff.
11. The basis on which the plaintiff has reason to believe that the first defendant is seeking to request work with or solicit customers or clients of the plaintiff is set out in the affidavit of Ms Whealey. On 7 December 2022 Ms Whealey called one of her clients, Trevi Court Aged Care, about staffing. She was informed by Natalie Tammark that the first defendant had told her that she, Ms Whealey, would be leaving the plaintiff's employment soon. Ms Tammark also said that the first defendant had called her to explain his absence over the past few weeks because he had left the plaintiff's employment.
12. Then on 9 December 2022 another client of the plaintiff, Angela Hayes, at Mercy Place Rice Village (an aged care facility) told her that the first defendant started to place labour hire workers with them. On 13 December 2022 she received an email from Ms Hayes, requesting urgent placement of staff. She noted that the first defendant's work address at the second defendant's company had been copied in on the email.
13. Then on 21 December 2022 she had a conversation with Narelle Grech, who was the facility manager at Mercy Place Rice Village. Ms Grech said that one of the labour hire workers had recently been placed by the first defendant at the facility on behalf of the second defendant. Ms Grech also said that she, Ms Grech, understood that Ms Whealy was about to leave the plaintiff and join the first defendant at the second defendant's workplace because the first defendant had said they were "best buddies".
14. Further, Ms Grech told Ms Whealy that the first defendant had informed Ms Grech that the plaintiff had been harassing and stalking him and that the first defendant had been frequently calling her.
15. The plaintiff says that, having regard to the information that it has thus far been able to uncover, the first defendant is canvassing or soliciting customers of the plaintiff and that the first defendant, on behalf of the second defendant, has already placed staff with customers of the plaintiff. The plaintiff thus seeks to restrain the first defendant from doing so.

The Contract of Employment

1. The Contract of Employment is dated 29 August 2022. It is signed by Mr Blackman (on behalf of the plaintiff) and the first defendant. Although the agreement was said to commence on 19 May 2022, that is apparently a typographical error. The date should be 29 August 2022, which was the date on which the first defendant commenced employment with the plaintiff.
2. The Contract of Employment sets out the duties and obligations of the parties, the nature of the work to be performed by the first defendant, and all the standard terms and conditions that might be expected.
3. Clause 29 requires that should the employee elect to terminate the employment with the employer, the employee will give a minimum of four weeks' notice to the employer. It is apparent that the first defendant did not give the required period of notice.
4. Clause 32 contains what is purported to be a restraint of trade. The period of the restraint is specified as being 12 months. The terms of the restraint are as follows: "(a) Nothing in this agreement will be construed to limit the duty or duties owed by the employee to the employer at law, in equity or by statute. (b) During the restraint period the employee must not within the restraint area: (i) Prepare to be, or be, involved in any competing business; or (ii) Canvass, solicit, induce or encourage any person who was an employee or contractor of the employer to leave the employer; or (iii) Canvass, solicit, approach or accept any approach from any person who was at any time an existing or prospective client or customer of the employer; or any person who refers business to the employer on a regular or ongoing basis, with a view to obtaining custom or any business introduction from that person in a competing business; or (iv) Interfere in any way with the relationship between the employer and its employees, clients, customers, contractors, or suppliers; or (v) Act in any restricted way as defined above. (c) The employee acknowledges that: (i) Each agreed restraint specified above is, in the circumstances, reasonable and necessary to protect the genuine business interests of the employer; (ii) Damages are not necessarily an adequate remedy if the employee breaches this restraint clause; and (iii) The employer may apply for injunctive relief if the employee breaches or threatens to breach this restraint clause or the employer believes the employee is likely to breach this restraint clause. (d) Each possible combination of restraint period, restraint area and restrained conduct above are separate and independent provisions and operate simultaneously. (e) Each party agrees that each combination of restraint period, restraint area and restrained conduct is severable from other combinations, and the other combinations of restraint period, restraint area and restrained conduct will remain operative if another combination is severed."
5. The plaintiff submits that, having regard to the terms of the restraint, the first defendant is acting in breach of the Contract of Employment in working with the second defendant and soliciting and canvassing work with the plaintiff's clients and customers.

The principles to be applied

1. The principles to be applied are well known. It is necessary to be satisfied that there is a serious question to be tried and that the balance of convenience favours the granting of the interlocutory injunction: see Australian Broadcasting Corporation v O'Neill (2006) 277 CLR 571; [2006] HCA 46 at [71] per Gummow and Hayne JJ; and Castlemaine Tooheys Ltd v South Australia (1986) 161 CLR 148; [1986] HCA 58 at [153] per Mason ACJ.
2. In determining whether there is a serious question to be tried, it is necessary for the plaintiff to establish that the claim is not frivolous or vexatious. The plaintiff must show that there is a reasonably arguable case on both the facts and law: Australian Broadcasting Commission v Lenah Game Meats Pty Ltd (2001) 208 CLR 199; [2001] HCA 63 at [16]). It is said to be an undemanding standard: see Kazzi v Raptime Pty Ltd t/as Community First Real Estate [2006] NSWSC 1261 at [12] per Biscoe AJ.
3. Having regard to the terms of the Contract of Employment and the evidence of both Mr Blackman and Ms Whealey, I am satisfied that there is a serious question to be tried.
4. It is well established that it is necessary to consider whether the restriction is reasonable, in the sense that it is necessary to provide adequate protection to the party in whose favour it is imposed, whilst at the same time not being injurious to the public: Nordenfelt v Maxim Nordenfelt Guns and Ammunition Co Ltd [1894] AC 535 at [565] per Lord Macnaghten; and Smith v Nomad Modular Building Pty Ltd [2007] WASCA 169 at [6] per McLure JA with whom Buss JA agreed.
5. Whilst there is always an issue as to the reasonableness of a restraint of trade clause, it is at least arguable that the restraint is valid.
6. In terms of the balance of convenience, it is necessary to consider whether damages may be an adequate remedy. The difficulty in determining whether damages may be an adequate remedy in a case such as this is that, at least at this stage, the nature and extent of the alleged breaches is unknown and that the potential for serious damage to the business of the plaintiff may be high, albeit the first defendant is only one recruitment consultant in a national business.
7. I adopt the observations of Edelman J (as his Honour then was) in Emeco International Pty Ltd v O'Shea [2012] WASC 282 at [21]: "The reasons why damages are often inadequate in these cases includes (i) the difficulty of detection of breaches of the obligations; (ii) the difficulty of establishing causation between any loss of business with customers and any actions of the ex-employee; and (iii) the difficulty of the calculation of the quantum of any damage arising from loss of business".
8. Mr Donaghey also submits that the first defendant has only recently arrived from the United Kingdom. He has already indicated an intention not to repay the $8,000 loan. As far as the plaintiff is aware, he may not have any assets in Australia at this time.
9. In all circumstances, I am satisfied that the plaintiff has established both that there is a serious question to be tried and that the balance of convenience favours the granting of the interlocutory injunctions at this time.
10. Having said that, I am not satisfied that all of the injunctions should be granted.
11. At the commencement of the hearing Mr Donaghey indicated that he was not pressing at this time interlocutory injunction 1(d), being an injunction restraining both the first and second defendants from using the plaintiff's confidential information (as there is no real evidence that the first or second defendants are using any confidential information).
12. I then raised with Mr Donaghey whether the injunction sought in paragraph 1(a), that is, restraining the first defendant from even working with the second defendant, would be appropriate. After some discussion, Mr Donaghey agreed that he would not be pressing order 1(a).
13. In the circumstances, I am only satisfied that the restraining orders set out in paragraphs 1(b) and 1(c) (as amended) should be made.
14. Mr Donaghey offers the usual undertaking as to damages on behalf of the plaintiff.
15. I am also satisfied that, as requested by the plaintiff, the first defendant should be warned about the consequences of non-compliance.
16. I thus make the following orders: Penal Notice: What follows is a Court order. Disobedience of a Court order can have serious consequences. 1. Upon the plaintiff through its counsel giving the usual undertaking as to damages, until the hearing and determination of the proceedings at final trial or further order of the court: 1. An interlocutory injunction restraining the first defendant from canvassing, soliciting, inducing or encouraging any person who was an employee or contractor of the plaintiff to leave the plaintiff is granted. 2. An interlocutory injunction restraining the first defendant from canvassing, soliciting, approaching or accepting any approach from any person who was at any time an existing or prospective client or customer of the plaintiff; or any person who refers business to the plaintiff on a regular or ongoing basis, with a view to obtaining custom or any business introduction from that person in a competing business is granted. 1. I grant liberty to any party to approach the Duty Judge in Equity at any time after 2 January 2023 on 24 hours' notice, should any party be seeking a variation of the orders that I have made today. 2. Costs will be costs in the cause. 3. I order that within 48 hours the plaintiff inform both defendants of my orders today.

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: 30 January 2023