Merrill Lynch (Aust) Pty Ltd v Johnson Taylor Potter Ltd [2001] FCA 241

FEDERAL COURT OF AUSTRALIA

Merrill Lynch (Aust) Pty Ltd v Johnson Taylor Potter Ltd [2001] FCA 241

PRACTICE AND PROCEDURE – ex parte injunction against former employees of stockbroker – whether injunction should be discharged – balance of MERRILL LYNCH (AUST) PTY LTD & ORS v JOHNSON TAYLOR POTTER LTD & ORS N 128 OF 2001 HEEREY J 16 FEBRUARY 2001 MELBOURNE

IN THE FEDERAL COURT OF AUSTRALIA

VICTORIA DISTRICT REGISTRY V 128 OF 2001

BETWEEN: MERRILL LYNCH (AUST) PTY LTD AND OTHERS

(ACN 006 390 772)

APPLICANT

AND: JOHNSON TAYLOR POTTER LTD AND OTHERS

(ACN 006 390 772)

RESPONDENT

JUDGE: HEEREY J

DATE OF ORDER: 16 FEBRUARY 2001

WHERE MADE: MELBOURNE

THE COURT ORDERS THAT: 1. The injunction granted on 14 February 2001 is discharged. 2. The applicant pay the respondents' costs of the application for an interlocutory injunction. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA

VICTORIA DISTRICT REGISTRY V 128 OF 2001

BETWEEN: MERRILL LYNCH (AUST) PTY LTD AND OTHERS

(ACN 006 390 772)

APPLICANT

AND: JOHNSON TAYLOR POTTER LTD AND OTHERS

(ACN 006 390 772)

RESPONDENT

JUDGE: HEEREY J

DATE: 16 FEBRUARY 2001

PLACE: MELBOURNE

REASONS FOR JUDGMENT 1 I need not trouble counsel for the respondents. I am satisfied that this injunction should be discharged. There does appear to be a serious issue to be tried, namely whether the general rules against employees taking away from an employer matters such as lists of clients is modified or even abrogated by what the evidence suggests is a practice within the broking industry in Australia, or at any rate in Melbourne. The suggested practice is that employee brokers move from firm to firm and their clients follow them and are regarded as clients of them rather than the employer. Whether that argument is a strong one is not for me to say at the moment, but there is evidence in support of it. 2 As to the two particular respondents, Mr Cody and Mr White, the evidence that they themselves took detailed lists which were generated by Merrill Lynch themselves, as distinct from their own notes which they had previously, seems somewhat equivocal at the moment. 3 But the most important consideration in my mind in discharging the injunction is the question of the balance of convenience. If an injunction were to be granted, it would have a very serious effect on the capacity of Mr Cody and Mr White to carry on a profession in which they have been engaged for some ten years or more. Even in its modified form the injunction, as proposed, would prohibit them from using knowledge, such as, for example, client names which they might have in their heads, quite unrelated to any documentary record at all, whether personal ones or ones generated by Merrill Lynch. 4 On the other hand, I am not satisfied that Merrill Lynch would suffer irreparable loss if the injunction were discharged but they were able to make out their case at trial. It would seem to be not impossible to identify Merrill Lynch clients who went across to Johnson Taylor Potter with Messrs Cody and White and what profits Merrill Lynch might have made from those clients. So, in other words, damages or an account of profits would be an adequate remedy. Further, Merrill Lynch is a very substantial organisation, with assets under management of some US$1.5 trillion. It should be able to compete in the marketplace and persuade its clients that they are better off staying with Merrill Lynch than going to Johnson Taylor Potter. 5 In any event, the material suggests that Merrill Lynch are taking a direction in which they are not so interested in the type of private client business that Messrs Cody and White were engaged in. So for those reasons the injunction will be discharged. The applicant must pay the respondents' costs. I certify that the preceding five (5) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Heerey.