McMurchy v Employsure Pty Ltd; Kumaran v Employsure Pty Ltd [2022] NSWCA 201

Court of Appeal Supreme Court New South Wales Medium Neutral Citation: McMurchy v Employsure Pty Ltd; Kumaran v Employsure Pty Ltd [2022] NSWCA 201 Hearing dates: 29 April 2022 Date of orders: 11 October 2022 Decision date: 11 October 2022 Before: Gleeson JA at [1] Leeming JA at [158] Kirk JA at [159] Decision: 2021/328205 (McMurchy/ELMO appeal) (1) Grant leave to appeal. (2) The appellants to file a notice of appeal in terms of the amended draft notice of appeal in the supplementary white folder, tab 1, within seven days. (3) Appeal dismissed. (4) The appellants to pay the respondent's costs in this Court. 2021/328225 (Kumaran/ELMO appeal) (1) Grant leave to appeal. (2) The appellants to file a notice of appeal in terms of the draft notice of appeal in the white book within seven days. (3) Appeal allowed. (4) Set aside orders 1, 3, 5 and 6 made by the primary judge on 26 October 2021 and in lieu order that the Summons filed 24 February 2021 be dismissed. (5) Reserve the question of costs in this Court. (6) If the parties do not submit consent orders as to costs in this Court and below within 14 days of the date of these orders, direct the respondent to file and serve its written submissions as to the appropriate cost orders within 21 days of the date of these orders, the appellants to file and serve their written submissions in response within a further seven days (in each case not exceeding four pages), with any reply by the respondent to be filed and served within a further seven days (not exceeding two pages), and note that the question of costs will be determined on the papers. Catchwords: CONTRACT – restraint of trade – whether exclusive employment covenants reasonable – whether potentiality for confidential information to be used to employer's detriment – where proposed new employer supplied a competing product – where employee had received information about marketing, shortcomings and potential development of employer's product CONTRACT – restraint of trade – whether competitor restraint reasonable – where restraint only operated if competition existed at termination – language of restraint justifies inference that parties contemplated competition at termination – not necessary to prove specific competitors existed at time of entry into restraint CONTRACT – restraint of trade – challenge to discretion to make declaration and grant injunction – whether protectable interest in employer's confidential information at date of hearing CONTRACT – restraint of trade – inducing or encouraging another employee to leave employment – whether other employee had independently decided to leave – where finding as to materiality of encouragement and inducement was well open Legislation Cited: Restraint of Trade Act 1976 (NSW), s 4(1) Supreme Court Act 1970 (NSW), ss 75, 101(2)(r), 103 Uniform Civil Procedure Rules 2005 (NSW), rr 28.2, 42.1 Cases Cited: Ainsworth v Criminal Justice Commission (1992) 175 CLR 564; [1992] HCA 10 AMP Services Ltd v Manning [2006] FCA 256 Cactus Imaging Pty Ltd v Peters (2006) 71 NSWLR 9; [2006] NSWSC 717 Curro v Beyond Productions Pty Ltd (1993) 30 NSWLR 337 Emeco International Pty Ltd v O'Shea (No 2) [2012] WASC 348; (2012) 225 IR 423 Employsure Pty Ltd v McMurchy [2021] NSWSC 139 Haynes v Doman [1899] 2 Ch 13 Herbert Morris Ltd v Saxelby [1916] 1 AC 688 Hodgson v Amcor Ltd [2012] VSC 94; (2012) 264 FLR 1 Isaac v Dargan Financial Pty Ltd (2018) 98 NSWLR 343; [2018] NSWCA 163 JMB (NSW) Pty Ltd v West [2020] NSWSC 1380 Kone Elevators Pty Ltd v McNay (1997) ATPR 41-564 Lindner v Murdock's Garage (1950) 83 CLR 628; [1950] HCA 48 Littlewoods Organisation Ltd v Harris [1977] 1 WLR 1472 Maitland Main Collieries Pty Ltd v Hunter Valley Coal Corporation Pty Ltd [2006] NSWCA 258 Metcash Limited v Jardim (No 3) [2010] NSWSC 1096; (2010) 273 ALR 407 Miles v Genesys Wealth Advisers Ltd [2009] NSWCA 25; (2009) 201 IR 1 Minister for Immigration and Border Protection v SZVFW (2018) 264 CLR 541; [2018] HCA 30 Pearson v HRX Holdings Pty Ltd (2012) 205 FCR 187; [2012] FCAFC 111 Peters (WA) Ltd v Petersville Ltd (2001) 205 CLR 126; [2001] HCA 45 Putsman v Taylor [1927] 1 KB 637 Sidameneo (No 456) Pty Ltd v Alexander [2011] NSWCA 418 Stenhouse Australia Ltd v Phillips [1973] 2 NSWLR 691 Sun v Chapman [2022] NSWCA 132 Tullett Prebon (Australia) Pty Ltd v Purcell [2008] NSWSC 852; (2008) 175 IR 414 Warren v Coombes (1979) 142 CLR 531; [1979] HCA 9 Woolworths Limited v Olson [2004] NSWCA 372 Texts Cited: J D Heydon, The Restraint of Trade Doctrine (2018, 4th ed, LexisNexis Butterworths) Young, Croft and Smith, On Equity (2009, Lawbook Co) Category: Principal judgment Parties: 2021/328205 David McMurchy (First appellant) ELMO Software Limited (ABN 13 102 455 087) (Second appellant) Employsure Pty Ltd (ABN 40 145 676 026) (Respondent)