Supreme Court New South Wales Medium Neutral Citation: Breedon v Oosthuizen [2023] NSWSC 859 Hearing dates: 30 June 2023 Date of orders: 30 June 2023 Decision date: 24 July 2023 Jurisdiction: Equity - Duty List Before: Meek J Decision: Interlocutory restraining orders made against first and second defendants Catchwords: RESTRAINT OF TRADE — Partnership agreement — Application for interlocutory injunction — Consideration of the principles regarding restraint of solicitation and restraint on competition — Where the interest sought to be protected by the restraint is the partnership's customer connection with the client, the reasonableness of the duration of the restraint will be assessed by considering the time taken to sever the partner's connection with the customer in question including giving weight to the period the parties themselves have selected — Reasonableness of a non-competition clause is also assessed by reference to the adequacy of the non-solicitation clause PRACTICE — Appearance — Procedure — Representation of defendant company by director — Uniform Civil Procedure Rules 2005 (NSW) rr 7.1(2), 7.2(1)&(2) considered INJUNCTIONS — Interlocutory injunctions — Discussion of principles in relation to the approach of the Court regarding the requirements in respect of finding a prima facie case for relief — The Court has regard to the circumstances prevailing at the hearing of the application for relief — Consideration of principles regarding whether the inconvenience or injury which the plaintiff would be likely to suffer if an injunction were refused outweighs or is outweighed by the injury which the defendant would suffer if an injunction is granted CIVIL PROCEDURE — Suppression and non-publication orders — Suppression order made prohibiting disclosure of information in confidential exhibit in respect of client lists Legislation Cited: Civil Procedure Act 2005 (NSW) Court Suppression and Non-publication Orders Act 2010 (NSW) Evidence Act 1995 (NSW) Restraints of Trade Act 1976 (NSW) Uniform Civil Procedure Rules 2005 (NSW) Cases Cited: A-Civil Aust Pty Ltd v Ceerose Pty Ltd [2023] NSWCA 144 Adamson v New South Wales Rugby League Ltd (1991) 27 FCR 535 Amoco Australia Pty Ltd v Rocca Bros Motor Engineering Co Pty Ltd (1973) 133 CLR 288; [1973] HCA 50 Attorney-General (Cth) v Adelaide Steamship Co Ltd [1913] AC 781 Australian Broadcasting Corporation v O'Neill (2006) 227 CLR 57; [2006] HCA 46 Bauskis v Liew [2013] NSWCA 297 Beecham Group Ltd v Bristol Laboratories Pty Ltd (1968) 118 CLR 618; [1968] HCA 1 Birdanco Nominees Pty Ltd v Money (2012) 36 VR 341; [2012] VSCA 64 Buckley v Tutty (1971) 125 CLR 353; [1971] HCA 71 Cactus Imaging Pty Ltd v Peters (2006) 71 NSWLR 9; [2006] NSWSC 717 Cardile v LED Builders Pty Ltd (1999) 198 CLR 380; [1999] HCA 18 Dewes v Fitch [1920] 2 Ch 159 Geraghty v Minter (1979) 142 CLR 177; [1979] HCA 42 Gilford Motor Co Ltd v Horne [1933] Ch 935 H & R Block Ltd v Sanott [1976] 1 NZLR 213 Hamod v State of New South Wales [2011] NSWCA 375 Harlow Property Consultants Pty Ltd v Byford [2005] NSWSC 658 Herbert Morris Ltd v Saxelby [1916] 1 AC 688 ICT Pty Ltd v Sea Containers Ltd (1995) 39 NSWLR 640 IRAF Pty Ltd v Graham [1982] 1 NSWLR 419 Isaac v Dargan Financial Pty Ltd (2018) 98 NSWLR 343; [2018] NSWCA 163 Jardin and v Metcash Ltd [2011] NSWCA 409; (2011) 285 ALR 677 John Fairfax Publications Pty Limited v Birt [2006] NSWSC 995 Kearney v Crepaldi [2006] NSWSC 23 Koops Martin v Reeves [2006] NSWSC 449 KPW Law Pty Ltd v Patel [2023] NSWSC 617 Lindner v Murdock's Garage (1950) 83 CLR 628; [1950] HCA 48 May v Christodoulou (2011) 80 NSWLR 462; [2011] NSWCA 75 Metcash Ltd v Jardim (No 3) [2010] NSWSC 1096; (2010) 273 ALR 407 Nordenfelt v Maxim Nordenfelt Guns and Ammunition Co Ltd [1894] 1 AC 535 North Western Salt Co Ltd v Electrolytic Alkali Co Ltd [1914] AC 461 Prest v Petrodel Resources Ltd [2013] 2 AC 415 Reid v Howard (1993) 31 NSWLR 298 Rouen v Ryan [2001] NSWCA 230 Seaward v Paterson [1897] 1 Ch 545 Shercliff v Engadine Acceptance Corp Pty Ltd [1978] 1 NSWLR 729 Stacks Taree v Marshall (No 2) [2010] NSWSC 77 Trego v Hunt [1896] AC 7 Tullett Prebon (Australia) Pty Ltd v Purcell [2008] NSWSC 852; (2008) 175 IR 414 Woolworths Ltd v Olson [2004] NSWCA 372 Wright v Gasweld Pty Ltd (1991) 22 NSWLR 317 X v Twitter Inc (2017) 95 NSWLR 301; [2017] NSWSC 1300 Zhu v Treasurer of the State of NSW (2004) 218 CLR 530; [2004] HCA 56 Texts Cited: Heydon, JD, The Restraint of Trade Doctrine (2nd ed, 1999, Butterworths) Heydon, JD, The Restraint of Trade Doctrine (3rd ed, 2008, LexisNexis Butterworths) Heydon, JD, The Restraint of Trade Doctrine (4th ed, 2018, LexisNexis) Category: Procedural rulings Parties: Paul Breedon (First Plaintiff) Jason Yu (Second Plaintiff) Adam Dyson (Third Plaintiff) Simon Alford (Fourth Plaintiff) Charles Oosthuizen (First Defendant) ProYou Audit Pty Ltd (Second Defendant) Representation: Counsel: S Sykes (Plaintiffs) Solicitors: MistryFallahi (Plaintiffs) Self-represented (First Defendant and Second Defendant in capacity as director) File Number(s): 2023/206820 Publication restriction: Suppression order in respect of Exhibit PB-2 until the hearing of final relief and subject to further order JUDGMENT Introduction 1. HIS HONOUR: On 30 June 2023, I heard urgently an application giving rise to some familiar principles regarding restraint of trade. On that occasion, I made orders and gave the briefest of reasons for the decision indicating that in due course I would provide detailed reasons for my decision. These are those more detailed reasons. 2. The plaintiffs are chartered accountants and partners of an accounting practice (firm) formerly known as Moore Australia (NSW) (Moore), but now trading under a registered name Byrons (Byrons). 3. On 1 October 2020, the plaintiffs and the first defendant (Mr Oosthuizen) entered into a partnership agreement (partnership agreement) and at least until 6 May 2022, Mr Oosthuizen was seemingly a member of the partnership. 4. On 11 May 2022, Mr Oosthuizen incorporated the second defendant (ProYou Audit). 5. The plaintiffs' summons filed on 28 June 2023 sets out interlocutory and final relief. The final relief includes forms of restraint against Mr Oosthuizen and ProYou Audit until 1 January 2025, deletion of any copies of a confidential exhibit (to which I will refer below), orders for an account of profits and/or damages and payment of the amount of any such profits or damages as assessed. 6. The plaintiffs seek on an interlocutory basis restraining orders against both defendants until effectively a final hearing of the proceedings and discovery to facilitate the plaintiffs being able to plead their claim and for the purposes of the hearing of the matter. 7. The restraint relief is essentially orders that Mr Oosthuizen and ProYou Audit be restrained from soliciting or canvassing the plaintiffs' clients, approaching any such clients to influence them to cease to be clients or to otherwise entice them away from the plaintiffs and, further, to be restrained from providing accounting, auditing, corporate advisory or other services provided by the plaintiffs to the plaintiffs' clients (restraint relief). 8. The discovery sought is essentially that Mr Oosthuizen and ProYou Audit disclose contact he or it has made with the plaintiffs' clients. During the early part of the hearing, I asked Mr Sykes (counsel for the plaintiffs) to indicate the basis for the discovery. He sought to underpin that by reference to provisions in the partnership agreement. Later on, in further discussion with Mr Sykes as to the nature of the relief he was seeking, it ultimately appeared that he was essentially asking for production of documents, and I proceeded to deal with the matter on that basis (production relief). 9. The restraint relief and production relief depend upon a number of issues including the construction of the partnership agreement and several contested facts. I address these issues specifically below. 10. The plaintiffs initially sought additional relief that the parties be directed to mediate. That was based on a provision of the partnership agreement. However, at the end of the hearing that relief was not pressed, although the possibility exists that at some later point of time it may well be sought. 11. Further, the plaintiffs for the purposes of making meaningful the restraint relief provided a confidential exhibit which was commercially sensitive in that it contains a list of the plaintiffs' clients. Mr Sykes accepted that the document would need to be provided to Mr Oosthuizen but submitted that it should be done so on a confidential basis. He sought an order to that effect pursuant to s 8(1)(a) Court Suppression and Non-publication Orders Act 2010 (NSW) citing as the basis for such an order X v Twitter Inc (2017) 95 NSWLR 301; [2017] NSWSC 1300 at [51]-[52] per Pembroke J to support the proposition that client lists are confidential and that it is in the interests of the administration of justice that a suppression order be made. 12. I accept the client lists are prima facie confidential. I made such a suppression order. The order was framed in terms suppressing disclosure by Mr Oosthuizen to anyone other than any potential legal representatives that might act for him. The order in a sense provisionally permits disclosure to any such legal representative subject to the legal representative not otherwise disclosing the material. The order was made as an interim order to cover the period up to and including a final hearing and was made subject to further order to provide appropriate opportunity to the parties to vary the order. 13. The partnership agreement (which I will refer to below) contains various provisions which very broadly speaking act to restrict the activity of an outgoing partner in respect of matters which bear upon the interests of the continuing partners with the client base of the partnership. Right to appear, evidence and adjournment not sought 1. Mr Oosthuizen sought to represent himself and ProYou Audit on the hearing and provided to the Court a form of appearance signed on behalf of himself and ProYou Audit. The appearance was signed by Mr Oosthuizen who described his capacity in signing the appearances as being "First Defendant and Director of the Second Defendant". 2. A company may "defend" proceedings (which term is included within the definition of "carry on proceedings"): see r 7.1(2) Uniform Civil Procedure Rules 2005 (NSW) (UCPR); s 19(2) Civil Procedure Act 2005 (NSW) (CPA). 3. Where a company seeks to defend such proceedings without a solicitor the Court may dispense with the requirement for a solicitor, if there is an appropriate reasonable basis to do so: s 14 CPA. Further, a director of the company may seek to defend such proceedings on behalf of the company provided the director files with the notice of appearance or defence, as the case may be, an affidavit as to his or her authority to act in that capacity, together with a copy of the instrument evidencing that authority: r 7.2(1) UCPR. The content of the affidavit is prescribed in r 7.2(2). Where the provisions are complied with the director will be relevantly entitled to defend the proceedings: May v Christodoulou (2011) 80 NSWLR 462; [2011] NSWCA 75 at [6] per Handley AJA, [95] per Sackville AJA (Macfarlan JA agreeing). 4. Mr Oosthuizen did not provide any such affidavit. However, Mr Sykes did not raise any issue in relation to Mr Oosthuizen appearing on behalf of ProYou Audit. Given the urgency of dealing with the matter, I did not raise any issue in relation to Mr Oosthuizen appearing on behalf of ProYou Audit. Nonetheless, going forward, he will need to address that issue. 5. I outlined basic Court procedures to Mr Oosthuizen but indicated to him that I could not advise him as to how his rights should be exercised: e.g. Bauskis v Liew [2013] NSWCA 297 at [66]-[69] per Gleeson JA referring to the principles in Hamod v State of New South Wales [2011] NSWCA 375 at [309]-[316]. 6. On the application the plaintiffs relied upon an affidavit of the first plaintiff, Paul Breedon (Mr Breedon) affirmed 26 June 2023 (APB), an exhibit PB-1 to that affidavit (EPB) and an affidavit of the second plaintiff, Hyung Suk Yu (known as Jason Yu) (Mr Yu) affirmed 26 June 2023. 7. Mr Oosthuizen had prepared an affidavit affirmed on 29 June 2023 (ACO) and an exhibit CO-1 (ECO) which he had prepared and respectively read and tendered (subject to objections) on the application. A degree of the evidence in the affidavit was in the nature of contention. I ruled on objections and in a number of instances admitted the evidence but limited its use under s 136 Evidence Act 1995 (NSW) (Evidence Act) to contentions on behalf of Mr Oosthuizen for his belief regarding certain matters. 8. Mr Oosthuizen also disputed evidence of a conversation of Mr Yu intimating that it was not a true reflection of what was said and that it did not take place at the place alleged. The evidence was strictly speaking admissible, and I admitted it. However, I indicated to Mr Oosthuizen options available to him as to addressing his dispute or complaint regarding the evidence including potentially seeking to give oral evidence on the matter or cross-examining the deponent. He did not avail himself of any of those options: T 4-5. 9. Mr Oosthuizen indicated early on during the hearing that he wished to adduce further evidence other than his affidavit and exhibit. He asserted that the plaintiffs had prevented him from accessing the systems and database of the firm and indicated that his affidavit had been prepared with no "official emails of the partnership" but rather from his "personal correspondence with them": T 3.20-21. I explained to Mr Oosthuizen the available options regarding how he might seek to adduce evidence, including the option of seeking to adjourn the hearing. He indicated that he did not wish to adjourn the hearing but wished to proceed with it. 10. Nonetheless, later on, during the course of submissions, Mr Oosthuizen indicated that he wished to adduce additional material. Although, at least formally, the time for adducing evidence had passed, I permitted Mr Oosthuizen to be able to adduce additional evidence and Mr Sykes did not oppose that. Mr Oosthuizen adduced a number of emails. The emails were marked Exhibits D1, D2 and D3. Issues 1. In identifying the case for interlocutory relief Mr Sykes handed up proposed short minutes of order which were marked as MFI-1. The proposed orders and MFI-1 with one adjustment to order 7 effectively replicated the relief sought in paragraphs 6-17 of the summons. 2. I sought to understand from Mr Sykes what provisions of the partnership agreement he submitted underpinned the claims for relief. In relation to proposed order 1 he referred to clause 21.3(a), in relation to proposed order 2 he referred to clauses 21.2(b) and 21.3(a) and in relation to proposed order 3 he referred to clause 21.3(c). 3. The restraint relief as noted depended upon construction of the partnership agreement and also a number of contested factual matters. Specifically, the issues raised are: 1. what is Mr Oosthuizen's status vis-à-vis the partnership? Specifically, has he retired from the partnership and if so when did that occur? Put another way, is he a "continuing partner" or an "outgoing partner" of the partnership? (Retirement status issue); 2. whether clause 21.3(a) of the partnership agreement, properly construed, precludes Mr Oosthuizen from providing services to any person who is a client of the partnership within a period of one year prior to the departure date even in circumstances in which there is no solicitation, canvassing or approach by Mr Oosthuizen to such a client (Construction issue); 3. is there evidence that Mr Oosthuizen has breached the restrictive provisions which the plaintiffs rely upon or might do so? (Breach issue); and 4. whether the restraint relief sought by the plaintiffs should be extended to restrain not merely Mr Oosthuizen but also ProYou Audit? (Restraint of ProYou Audit issue). 1. There is no doubt that apart from the Retirement status issue per se there is a dispute between the plaintiffs and Mr Oosthuizen regarding what (if any) payments are due to Mr Oosthuizen in respect of the partnership. Whilst that was not a matter directly relevant to the relief sought by the plaintiffs and also not a matter on which Mr Oosthuizen sought any particular relief on the application, clearly from Mr Oosthuizen's perspective he considers that an important issue to be addressed between the parties at least at some point. Further, he asserts he is suffering financial loss, arguably arising from that separate dispute, which matter he claimed to be relevant to the question of discretionary matters or balance of convenience regarding any restraint relief. Some background and context 1. The firm at least from the time of the partnership agreement carried on business at premises in Burwood and also in Castlereagh Street, Sydney: clause 3 partnership agreement. 2. Mr Oosthuizen indicated he was associated with the "Moore" brand for 26 years and was an equity partner of Moore from 1 July 2016. His evidence refers to an earlier partnership agreement dated 1 July 2011. However, no particular details were provided regarding the operation of the partnership prior to the date of the partnership agreement. 3. The partners who are parties to the partnership agreement were the four plaintiffs and Mr Oosthuizen. 4. Mark Shaw (Mr Shaw) commenced working with Moore on or about 7 January 2019 as a senior auditor/accountant: EPB 35. 5. By 2022, it appears another partner, Mark Channell (Mr Channell), had been admitted to the partnership (or at least to the management of the business) and he is described as being "Director – Business Services" and General Manager of Moore: EPB 19, 21. 6. Dudley Belling (Mr Belling) appears to have taken on the role as "Director, Audit and Assurance" with Moore and to have responsibility as the "Signing Partner" in that capacity: EPB 19, 46. 7. Irene Wang (Ms Wang) is described in some of the evidence as a partner. Mr Oosthuizen disputed that she was a partner of the firm and claims that the plaintiffs established an external auditor company in April 2022 without consulting him as the "incumbent audit partner". Specifically, he asserted that the plaintiffs required his permission to assign any work or engagement to Ms Wang: ACO [17]; T 45.24-35. 8. The evidence refers to various other people associated with Moore including for example, John Meagher who appears at least from May 2023 to have held some formal position with the firm: EPB 44. 9. For a period of a little over a year from 11 May 2022 until 22 May 2023, ProYou Audit was registered and known by the name "CA Audit Pty Ltd". On 22 May 2023, Mr Oosthuizen lodged with ASIC a notification of resolution changing the company name to "ProYou Audit Pty Ltd": EPB 17-18. ProYou Audit has its registered office and principal place of business at a unit in Bolton Street, Newcastle: EPB 17. 10. It appears that Mr Oosthuizen works with a number of people including David Cox (Mr Cox), Ross Jones (Mr Jones) and Alan Quinlan: Exhibit D2. Additionally, Mr Shaw now works with or is associated with ProYou Audit: Exhibit D2. Mr Oosthuizen indicated that each of Mr Cox and Mr Jones are partners of ProYou Business Advisory: T 38.28-39. Mr Oosthuizen was at pains to point out during the hearing of the matter that he was and had never been on the ProYou Business Advisory website nor employed by ProYou Business Advisory and was not connected in any way with that entity: T 41.19-27, 50-51. 11. The evidence did not explain in any clear way precisely how ProYou Audit operated. It is possible that ProYou Audit has a number of businesses or divisions run by it or under its auspices including "ProYou Business Advisory" on the one hand and "ProYou Audit Division" (or similar appellation). For the purposes of the hearing, it was not necessary to make any final determination regarding this. Partnership Agreement 1. The partnership agreement is in the form of a deed. 2. Clause 1 deals with interpretation and provides unless the context indicates otherwise that the following definitions apply: (d) Continuing Partners means the Partners other than the Outgoing Partner; … (e) Departure Date means the date the relevant Partner ceases to be a member of the Partnership; … (h) Outgoing Partner means a Partner who dies, retires, is expelled or otherwise ceases to be a member of the Partnership and, where the context requires, includes his or her legal personal relationship representative, trustee or other equivalent person; (h) Partner means each of the parties to this Deed together with each other person who is later admitted as a member of the Partnership and Partners means all of them; (i) Partnership means the partnership and associated entities (The Practice) constituted between the Partners under this Deed; … (k) The Practice means the accounting practice carried on by the Partners under this Deed known as 'Moore Australia (NSW)', and including related entities, and any future related entities 1. Clause 8 provides 8. Directorships and other appointments Unless otherwise agreed by the partners, any income derived by a Partner as a Director of a company or from any position or employment involving the provision of services normally provided by the Partnership is property of the Partnership and nay Partner deriving that income must hand it over to the Partnership. … 1. Clause 11 deals with decisions by the partners and provides: Subject to any contrary provision of this Deed, any act to be done by the Partners connected With the Partnership must only be done if agreed to by a majority interest of the Partnership. 1. Clause 13 deals with duties of the partners and provides: 13. Duties of the partners Each Partner must, unless otherwise permitted by all the other Partners: (a) devote the whole of his or her time and attention to the Practice and no Partner may, without the consent of all the other Partners, engage in or be concerned or interested in any way whatsoever in any other business or enter into any employment or hold any office or appointment otherwise than for the benefit of the Partnership; (b) punctually pay his or her separate debts and liabilities and indemnify the other Partners and the assets of the Partnership against those debts and liabilities. (c) immediately pay all money, cheques and negotiable instruments received by him or her on account of the Partnership to the credit of the Partnership Bank Account; and (d) be just and faithful to the other Partners and to the Partnership in all transactions relating to the Partnership and when reasonable required to do so, must furnish to the other Partners full and satisfactory explanations of all matters transactions and things relating to the Partnership. … 1. Clause 16 deals with decisions by the partners and provides: 16. Restrictions on partners No Partner may, without determination by the majority interests of the Partnership: … (h) divulge any confidential information about the Partnership or the business of the Partnership to any person not authorised to receive that information;" 1. Clause 18 deals with retirement and resignation of a partner and provides as follows: A Partner may on giving to the other Partners at least 26 weeks previous notice in writing of his or her intention so to do, retire/resign from the Partnership. 1. Clause 21 deals with restrictions on outgoing partners and provides as follows: 21. Restrictions on outgoing partners 21.1. The Outgoing Partner agrees with the Continuing Partners that he or she will not directly or indirectly in any capacity whatsoever be concerned with, employed in, engaged in or carry on any accounting practice at any time during the period of 2 years after the Departure Date, within a radius of ten kilometres from any premises where the Partnership carries on the Practice as at the Departure Date. 21.2. The Outgoing-Partner agrees with the Continuing Partners that at any time after the Departure Date he or she will not: (a) make public or divulge to any person any trade secret or any information concerning the business or finances of the Partnership or any of the Partners or any of their dealings or transactions; or (b) do any act or thing whatsoever which may injure, impair or reduce or be likely to injure, impair or reduce the business, goodwill or reputation of the Partnership, the Practice or any of the Partners or its or their standing in the eyes of the public or any of its or their clients. 21.3. The Outgoing Partner agrees with the Continuing Partners that for the period of 2 years after the Departure Date he or she will not: (a) solicit, canvass or in any way whatsoever seek the custom of or provide goods or services of the type provided by the Partnership to any person who was a client of the Partnership within the period of one year prior to the Departure Date; (b) advertise, publicise or permit the advertising or publicising of his former connection with the Partnership, the Practice or any of the Partners; (c) approach directly or indirectly any client of the Partnership to influence him or her to cease to be a client of the Partnership or otherwise to entice him or her away from the Partnership; or (d) approach directly or indirectly any employee or other Partner of the Partnership to influence him or her to cease employment with or cease to be a member of the Partnership or otherwise entice him or her away from the Partnership. 1. Clause 22 deals with dispute resolution and relevantly includes the provision that if a dispute arises out of or relates to the partnership deed, a party may not commence any court proceedings relating to the dispute unless he or she has complied with clause 22, except where the party seeks urgent interlocutory relief: clause 22.1. 2. Clause 25 addresses the proper law of the partnership and indicates that the deed is governed by the laws for the time being in force in New South Wales. 3. Clause 26 deals with severability of the provisions of the deed and provides as follows: In the event that any clause or part of a clause of this Deed is void, invalid, illegal, unlawful or otherwise unenforceable, that clause or part of a clause is deemed to be severed from this Deed and of no force or effect, so that all other clauses and parts of clauses of this Deed continue to remain in full force and effect. Legal principles 1. In an application for an interlocutory injunction there are two main enquiries. The first is whether the plaintiff has made out a prima facie case, in the sense that if the evidence remains as it is there is a probability that at the trial of the action the plaintiff will be held entitled to relief. The second is whether the inconvenience or injury which the plaintiff would be likely to suffer if an injunction were refused outweighs or is outweighed by the injury which the defendant would suffer if an injunction is granted: see e.g. Australian Broadcasting Corporation v O'Neill (2006) 227 CLR 57; [2006] HCA 46 (ABC v O'Neill) at [19] per Gleeson CJ and Crennan J, at [65]-[72] per Gummow and Hayne JJ citing Beecham Group Ltd v Bristol Laboratories Pty Ltd (1968) 118 CLR 618; [1968] HCA 1 (Beecham) at 622-623 per Kitto, Taylor, Menzies and Owen JJ. 2. The notion of a "prima facie case" does not mean that the plaintiff must show that it is more probable than not (or that there is a more than an even chance) that at the trial the plaintiff will succeed. It is sufficient that the plaintiff show a sufficient likelihood of success to justify in the circumstances the preservation of the status quo pending the trial: ABC v O'Neill at [65] citing Beecham at 620; Shercliff v Engadine Acceptance Corp Pty Ltd [1978] 1 NSWLR 729 (Shercliff) at 735D per Mahoney JA (Glass and Samuels JJA at 731E agreeing). The Court on such applications does not attempt to forecast what will happen at the hearing; it cannot do so: Shercliff at 735D, 736E-F. 3. The function of the Court is not to conduct a preliminary trial of the action, nor is it, in general, to resolve the conflict between the parties' evidence and grant or refuse the application upon the basis of such findings. Where there is conflict of evidence, the use which may be made of the defendant's evidence in determining whether the plaintiff has made out a prima facie case is said to be a limited one: Shercliff at 734D-E. 4. It is clear that the Court ought to take into account all the evidence adduced on the application for the purpose of determining whether to grant the relief or not. That includes (lest there be any doubt about it) the evidence of the defendant (or opposing party): Shercliff at 734B-D. 5. In exercising the discretion to grant or withhold injunctive relief the Court has regard to the circumstances as at the date of the hearing. Thus, even where, judged as of the date of the contract, a restraint is reasonable and valid, the Court may, on discretionary grounds, withhold injunctive relief if at the date of the hearing there is no protectable interest, or, if in the events which have happened (as distinct from those foreseeable at the date of the contract) the restraint is wider than necessary for the reasonable protection of the covenantee's legitimate interests: Tullett Prebon (Australia) Pty Ltd v Purcell [2008] NSWSC 852; (2008) 175 IR 414 (Tullett) at [88], [91] per Brereton J (as his Honour then was). 6. The second aspect referred to in ABC v O'Neill (whether the inconvenience or injury which the plaintiff would be likely to suffer if an injunction were refused outweighs or is outweighed by the injury which the defendant would suffer if an injunction is granted) has traditionally been referred to in a shorthand way under the description "balance of convenience": e.g. see recently A-Civil Aust Pty Ltd v Ceerose Pty Ltd [2023] NSWCA 144 at [22] per Payne JA, Simpson and Basten AJJA. I will refer to it by that description. 7. Factors to be considered in respect of whether to grant relief or not include whether there is any relevant delay by the applicant and hardship and adverse impact to the personal and financial circumstances of the former employee: John Fairfax Publications Pty Limited v Birt [2006] NSWSC 995 (Birt) at [49] per Brereton J (as his Honour then was), Tullett at [104]-[105]. 8. Some sense of the consideration of the question of any hardship said by a party to have been suffered or likely to be suffered is given in the decision of Brereton J in Birt at [49] as follows: 49. There is no doubt that enforcing the restraints by injunction will occasion hardship to Mr Birt, and one cannot but have considerable sympathy for his predicament: he will be out of employment for three months, although it seems that upon expiration of the three month restraint, Hannan will still employ him, so that he will not lose his employment opportunity forever. This hardship is increased by the circumstance that his wife is expecting their second child in about a month; and their first child is only 16 months old. However, enforcement of such restraints frequently occasion hardship to employees who, in defiance of them, accept employment with competitors. To a significant extent, an employee who pursues such employment despite the terms of a restraint is the author of his or her own misfortune. I do not think that sympathy for the position in which Mr Birt now finds himself can justify not enforcing the contractual rights of Fairfax Publications. 1. The general principles applicable to restraint of trade cases have been frequently discussed and summarised in caselaw. 2. Principles regarding restraint of trade clauses must grapple with many different relationships between contracting parties and different types of covenants. 3. Caselaw gives rise to some broad general principles which inform the approach to be taken to covenants imposing restraints which arise in different sorts of relationships between contracting parties. 4. The classic case of Nordenfelt v Maxim Nordenfelt Guns and Ammunition Co Ltd [1894] AC 535 (Nordenfelt) was dealt with effectively on the basis of the principles as between vendor and purchaser: e.g. at 559-560 per Lord Macnaghten. In the renowned case of Trego v Hunt [1896] AC 7, the House of Lords addressed the right of a partner to set up a competing business and to canvass customers of the partnership business. 5. Further, it has been said that courts differ in their attitude to different types of covenants including goodwill and employment covenants, so that the decision as to which category a covenant falls into can be important: JD Heydon, The Restraint of Trade Doctrine (4th ed, 2018, LexisNexis) (The Restraint of Trade Doctrine (4th ed)) at 98. 6. Heydon comments that covenants made between partners are not treated more strictly than employment covenants: The Restraint of Trade Doctrine (4th ed) at 99 citing Geraghty v Minter (1979) 142 CLR 177; [1979] HCA 42 (Geraghty v Minter) at 185 per Gibbs J (Aickin J agreeing). 7. Mr Sykes referred to Geraghty v Minter. The relevant passage is as follows (footnotes omitted): The fact that the appellants were admitted as partners, rather than merely employed, cannot in itself mean that the respondents have any less right to protect their interest in the business. The courts in general take a stricter and less favourable view of covenants in restraint of trade entered into between employer and employee than of similar covenants between vendor and purchaser: see Halsbury's Laws of England, 3rd ed., vol. 38, par. 26, and Lindley on Partnership, 13th ed. (1971), p. 458. Jenkins v. Reid and Craig v. Cole may possibly be regarded as providing some support for the view that the considerations which apply in determining the validity of covenants in restraint of trade between master and servant are also applicable in some cases of partnership, whereas Whitehill v. Bradford appears to be authority for a rather more liberal approach in partnership cases. It is probably right to regard partnership covenants as sui generis (see Lindley, op. cit., p. 459) and to treat some cases where there is in fact a sale of goodwill as different from those in which an employee is taken into partnership. However, in no circumstances can there be any reason for regarding covenants made between partners more strictly than those made between employers and employees. 1. A convenient summary of some of the general principles is set out in the decision of McDougall J in Stacks Taree v Marshall (No 2) [2010] NSWSC 77 (Marshall) at [44] drawing upon submissions of counsel who appeared in that case as refined by opposing counsel. 2. In summary, (and omitting some reference to all the authorities cited in Marshall) I note the following: 1. At common law, a restraint of trade is contrary to public policy and void, unless it can be shown that the restraint is, in the circumstances of the particular case, reasonable: Nordenfelt at 565; Amoco Australia Pty Ltd v Rocca Bros Motor Engineering Co Pty Ltd (1973) 133 CLR 288; [1973] HCA 50 at 315. 2. In New South Wales, by force of statutory provision, a restraint is valid to the extent to which it is not against public policy. 3. The correct approach to the application of s 4(1) of the Restraints of Trade Act 1976 (NSW) (Restraints of Trade Act) is that the Court first determines whether the alleged breach (independently of public policy considerations) does or will infringe the terms of the restraint properly construed. Next, the Court determines whether the restraint, so far as it applies to that breach, is contrary to public policy. If it is not, the restraint is valid, subject to any order which may be made under s 4(3): Isaac v Dargan Financial Pty Ltd (2018) 98 NSWLR 343; [2018] NSWCA 163 at [61] per Gleeson JA (Bathurst CJ and Beazley P (as her Excellency then was) at [1], [2] agreeing). 4. The onus at common law of showing that the restraint goes no further than is reasonably necessary to protect the interests of the person in whose favour the restraint operates lies on the party seeking to support the restraint as reasonable: Adamson v New South Wales Rugby League Ltd (1991) 27 FCR 535 at 554 per Hill J and North Western Salt Co Ltd v Electrolytic Alkali Co Ltd [1914] AC 461 at 470 per Viscount Haldane LC. 5. The onus of establishing that a contract in restraint of trade is injurious to the public interest lies on the party alleging that it is so: Attorney-General (Cth) v Adelaide Steamship Co Ltd [1913] AC 781 at 797. 6. The Court gives considerable weight to what parties have negotiated and embodied in their contracts, but a contractual consensus cannot be regarded as conclusive, even where there is a contractual admission as to reasonableness: Woolworths Ltd v Olson [2004] NSWCA 372 (Olson) at [39] per Mason P (McColl JA agreeing). 7. The validity of the restraint is to be tested at the time at which the contract is made and having regard to what it entitled or required the parties to do as distinct from what they intend to do or have actually done: Olson at [40] per Mason P (McColl JA agreeing). 8. The test of reasonableness is measured by reference to the interests of the parties concerned and the interests of the public. The requirement that the restraint be reasonable in the interests of the parties means that the restraint must afford no more than adequate protection to the party in whose favour it is imposed: Buckley v Tutty (1971) 125 CLR 353; [1971] HCA 71 at 376 per Barwick CJ, McTiernan, Windeyer, Owen and Gibbs JJ; Koops Martin v Reeves [2006] NSWSC 449 (Koops Martin) at [28] per Brereton J. 9. As the parties have to turn their minds 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. Reasonableness does not require precise concordance between the restraint and what might ultimately be seen as the employer's legitimate interests: Koops Martin at [53]. 10. An employer is not entitled to require protection against mere competition: Dewes v Fitch [1920] 2 Ch 159 (Dewes v Fitch) at 181 per Warrington LJ; Wright v Gasweld Pty Ltd (1991) 22 NSWLR 317 at 329 per Gleeson CJ. 11. A restraint clause will be invalid unless it is necessary to prevent disclosure of trade secrets or use of a connection built up by the employee with customers: JD Heydon, The Restraint of Trade Doctrine (2nd ed, 1999, Butterworths) (Heydon, The Restraint of Trade Doctrine (2nd ed)) at 66. 12. The relevant knowledge must be more than simply the skill and knowledge necessary to equip the employee as a possible competitor in a trade, but the obtaining of personal knowledge of and influence over the customers of his employer, or such that an acquaintance with his employer's trade secrets would enable him to take advantage of his employer's trade connection or utilise information confidentially obtained: Dewes v Fitch at 181 per Warrington LJ. 13. An employer's customer connection is an interest which can support a reasonable restraint of trade, but only if the employee has become vis-à-vis the client, the human face of the business, namely, the person who represents the business to the customer: Cactus Imaging Pty Ltd v Peters (2006) 71 NSWLR 9; [2006] NSWSC 717 per Brereton J (as his Honour then was) at [25]; Kearney v Crepaldi [2006] NSWSC 23 at [51]-[53] per McDougall J. An employee will typically be found to be the human face of the business where the business is in fact the conduct of a profession, and where the employee is a professional who provides confidential services to the clients of the business – although each case will always depend upon its own particular facts: Koops Martin at [34]-[35]. 1. Covenants that restrain an ex-employee from competing with his or her employer are invalid unless they are reasonably necessary to prevent disclosure of trade secrets or confidential information, or use of a connection built up by the employee with the employer's customers: Harlow Property Consultants Pty Ltd v Byford [2005] NSWSC 658 at [25] per White J (as his Honour then was) citing Heydon, The Restraint of Trade Doctrine (2nd ed) at 66; Herbert Morris Ltd v Saxelby [1916] 1 AC 688; Lindner v Murdock's Garage (1950) 83 CLR 628; [1950] HCA 48 at 633-634 per Latham CJ. 2. In particular, where the interest sought to be protected by the restraint is the employer's customer connection with the client, the reasonableness of the duration of the restraint will be assessed by considering the time taken to sever the employee's connection with the customer in question: Marshall at [69]-[74]. Because assessment of that time might well involve a large element of conjecture, it has been said that considerable weight should attach to the period that the parties themselves have selected: Marshall at [69] citing IRAF Pty Ltd v Graham [1982] 1 NSWLR 419 at 429 per Rath J. 3. Further, where there is a non-solicitation provision, the reasonableness of a non-competition clause must be assessed by reference to the adequacy of the non-solicitation clause. The presence of one restraint diminishes the need for others, or at least increases the burden of those who seek to justify the other restraints. If the non-solicitation clause offers sufficient protection, a covenant not to compete is liable to be struck down as no more than a covenant against all competition per se: Marshall at [62]-[64]. 4. In approaching the matter, I bear in mind what was said by Gibbs J in Geraghty v Minter. It is clear in partnership cases that the Court bears in mind the abovementioned general principles as are applicable to partnerships together with the application of the statutory provisions in s 4 of the Restraints of Trade Act: e.g. Rouen v Ryan [2001] NSWCA 230; Pryse v Clark [2017] NSWSC 185 at [35]-[38] per McDougall J. Importantly, the cases also make clear that in each case the Court has regard to the particular circumstances of the agreement between the parties and the facts of the case. Facts bearing upon the issues 1. Noting of course that the proceedings are in their infancy, the evidence revealed the following. 2. On 6 May 2022, the second plaintiff, Mr Yu, says Mr Oosthuizen approached him at the offices in Sydney and had a conversation in words to the following effect: Charles: "Hi Jason, I need to talk to you. I have decided to resign from Moore and from my position in the partnership." Me: "What is the reason for your decision?" Charles: "I did not make this decision lightly. It has nothing to do with the practice. I would just like to spend more time with my family and work closer to where my family lives. It is not really a business decision, but a life decision." Me: "I am sorry that you will leave Moore, but I can only wish you all the best. I suggest that your resignation be effective after 30 June 2022. You will need to help with the transition to Dudley during your six-month notice period." Charles: "Absolutely. I will talk to him. I will make sure the transition goes smoothly." Me: "Thank you. I will let the partners know." Charles: "Thanks. You know I wish the best to Moore and with to remain on good terms with the practice and the partners." 1. The above-mentioned conversation was disputed by Mr Oosthuizen as I have noted. However, Mr Oosthuizen did not adduce any contrary evidence nor sought to cross-examine Mr Yu. 2. Following the conversation, Mr Yu sent an email to what appeared to be the then partners of Moore including, importantly, Mr Oosthuizen. 3. The content of the email is as follows: Hi All I had a chat with Charles this morning and Charles has confirmed his resignation from our partnership. Subject to the remaining partners' discussion, we need to formally accept Charles resignation in due course. I have suggested his resignation from our partnership be effective as of 30 June 2022. The notice period of transitioning works from Charles to Dudley will be discussed separately. Charles hasn't made his decision lightly and wants to spend more time with his family near his place. It is more of a life decision rather than a business one. Charles will talk to Dudley about his decision to ensure a smooth transition and let us know when we can talk to Dudley. Charles wishes us the best for the practice and will remain on good terms with us. I will also wish him the best and appreciate his efforts during the difficult times in recent years. We can discuss the matters in our next partners' meeting, which is next Thursday. If you have any queries regarding this matter, please contact me at any time. Regards, Jason Yu 1. There is a slight shift in terminology in the conversation as deposed by Mr Yu which refers to a suggestion that "your resignation be effective after 30 June 2022" from the terminology in the email in which the suggestion is that Mr Oosthuizen's "resignation from our partnership be effective as of 30 June 2022". 2. Of some note is that there is no suggestion that Mr Oosthuizen replied to the email or in any way disputed the reference to resignation and the timing in the email. 3. On 11 May 2022 (as noted above), ProYou Audit was registered. 4. On 12 May 2022, at 8 AM at Burwood, there was an equity partners meeting of Moore. The four plaintiffs were present together with Mr Channell. Mr Oosthuizen was recorded as being an apology at the meeting. The minutes of the meeting record various matters including a topic described as "CO Resignation". The content relating to this item was recorded as being as follows: JY referred to his email of 6 May 2022 regarding COs resignation from the partnership. It was resolved to accept CO's resignation effective from 30 June 2022: EPB 20. 1. At some point after 11 May 2022, Mr Oosthuizen claims he tabled a business plan via email for the partnership with Mr Channell which included a request for funding personal expenditure he incurred in establishing ProYou Audit on 11 May 2022: ACO [14]. 2. He states that: to facilitate & expedite the development of the service lines CA Audit remained dormant and I continue to provide the services through the partnership together with external audit services: ACO [15]. 1. On 14 September 2022, Mr Channell corresponded with Mr Oosthuizen by email scanning a page from a document and asking him to sign and return it: EPB 21. Within 13 minutes, Mr Oosthuizen responded to the email as follows: Hi Mark I can't be signing any of these things as I am no longer equity partner. These liabilities etc been taken on and should not include me. As from 1 July I am not an equity partner and we just need to find those formalities out. Cheers Charles 1. On 15 December 2022, Butlers Business Lawyers on behalf of Mr Oosthuizen wrote a letter to the directors of Moore indicating that they acted for him and was instructed that there had been "discussions regarding the departure and sale of our client's interest in Moore Australia NSW and its associated entities (The Partnership)": ECO 1-2. 2. The letter went on to assert that Mr Oosthuizen had attempted unsuccessfully to obtain sufficient financial information to determine the value of his interest in the partnership and made a proposal regarding his interest. 3. It is unclear whether there was any response to that letter. 4. However, on the morning of 22 December 2022, the relations between the parties became strained. 5. Mr Oosthuizen that morning sent an email to Mr Channell and another person indicating that he had not been paid his fortnightly wage and requested a reason for that and when payment could be expected. He further noted that his NAB company credit card had been blocked. 6. He asserts that apart from the cessation of fortnightly drawings, the plaintiffs ceased his access to company email servers, clients and staff as at 22 December 2022 without notice: ACO [11]. 7. Later, on 22 December 2022, at 2:08 PM, Mr Oosthuizen sent an email to Lana Weldon and David Tomasi regarding what appears to be a work matter apologising for the use of his personal email. The email was copied to at least Mr Breedon and Mr Channell. 8. Later still, on 22 December 2022, at 4:38 PM, he sent an email to the partners noting that he had no response to his email of the morning and asserting that they had stopped paying his wage and restricted his access to the server. 9. The dawn of a new year appears to have given rise at the very least to a practical and physical parting of the ways between the parties. 10. Mr Breedon asserts that in January 2023, Mr Oosthuizen commenced employment at a new accounting firm "ProYou Business Advisory": APB [18]. Breedon referred to an extract of a webpage: EPB 22-25. I note that the webpage does have the words "ProYou" close to the word "Advisory" but does not contain the word "Business" close to those words. 11. On 8 February 2023, Mr Oosthuizen wrote a letter to Mr Yu in which Mr Oosthuizen described himself as "Partner Moorer [sic] Australia NSW". 12. On 15 March 2023, Mr Shaw wrote to Moore's HR manager Heather Livian (Ms Livian) resigning from his position as Audit Manager with Moore: EPB 37. 13. In relation to Mr Shaw's resignation, Mr Breedon gave evidence that Ms Livian had conducted an exit interview with Mr Shaw citing that Mr Shaw has "followed Director (Charles Oosthuizen) to a new firm": APB [20]; EPB 38. Mr Breedon's affidavit exhibited what was said to be a copy of a file note made by Ms Livian to that effect: EPB 38. The document on page 38 does not appear to be a file note as such. It is an email from Mr Breedon (7 June 2023) which in its terms states "following is a screenshot of the note from our HR manager on file for Mr Shaw confirming his verbal affirmation he has "followed Director (Charles) to a new firm"". The email contained below it has a picture and details referable to Mr Shaw with reference to "Status" as being "Employee – Terminated on 14/04/2023". Just below that is a reference to "Termination summary" being "Mark Shaw was offboarded on 14/04/2023 by Heather Livian with a reason of: Voluntary… firm": EPB 38. The photocopying of the document for the purposes of the exhibit appears to have cut off certain words between words "Voluntary" and "firm". 14. On 20 March 2023, Ms Wells, a staff member or other representative of one of the firm's clients, sent an email to Marriam Katawazi, an auditor at Moore (I note that Mr Oosthuizen had been appointed as an external examiner to the client) in the following terms: "Dear Marriam, I have received an email from Charles Oostuizen [sic] that he is not with your firm and that he is the appointed external examiner. Can you please advise as to who at your firm is doing this now or do I need to have Charles do this? Please advise as soon as convenient." 1. The email from Ms Wells appears to have been a type of watershed moment and galvanised the plaintiffs into particular action regarding Mr Oosthuizen. 2. On 21 March 2023, Mr Belling emailed Ms Wells and also a number of contact persons at various clients. 3. In particular, at 9:51 AM, 10:14 AM, 10:24 AM, 10:28 AM and 10:53 AM on 21 March 2023, Mr Belling sent a type of pro forma email (with some slight variations in wording) to such clients of the firm introducing himself noting that "Charles is regretfully no longer with our firm and we have therefore undertaken an exercise of reallocating the clients that were assigned to Charles between our remaining audit partners …". The emails appear to be an attempt to engage the clients regarding intentions in respect of existing and ongoing work: EPB 49, 52, 54, 57 and 60. 4. On the afternoon of 21 March 2023, following a series of emails with Ms Wells, she sent an email to Mr Belling in the following terms: Hi Dudley, As Charles is already appointed as the external examiner and has been for some time, and after some thought, I have decided to leave everything as is and have him continue with this process. I am not a big fan of change and prefer to leave it for the moment with Charles. I apologise for not thinking this through and for confirming without seeing what changes were required. Should it change next year I will advise you accordingly. 1. On 23 March 2023, Mr Oosthuizen sent an email to meet Ms Hodgson with the subject heading "Change of business operations" and stating as follows: Dear Caroline I trust you are well. After 26 years of being a part of Moore Global, I have embarked on a change of direction for my business. I am pleased to advise that I, together with my audit team, have joined LEA Global as a network partner, and will continue to assist clients with Auditing, Corporate Advisory, and related services. Founded in 1999, LEA Global (https://leaglobal.com) is one of the largest international professional associations in the world, creating a high-quality alliance of over 200 independently owned accounting and consulting firms focused on auditing, accounting, financial and business advisory services. Through our local operating entities, ProYou Business Advisory and ProYou Audit, we provide a full suite of professional services to a diverse range of clients in Australian, and I look forward to being of assistance to you and Healesville as you may require. Moore Australia NSW should be reaching out to you to advise of the change and any transitional arrangements within their operations, new engagement partner and team members. However, if my team and I can be any assistance, please do not hesitate to contact me. 1. On 14 April 2023, it appears that Mr Shaw's appointment or association with Moore was terminated: EPB 38. 2. On 1 May 2023, Mr Belling sent an email to another contact, Ms Giles, a client he had contacted on 21 March 2023. Ms Giles later that afternoon sent a responsive email to Mr Belling in the following terms: Thank you but we are retaining Charles to do this for the sake of continuity: EPB 54. 1. Also on 1 May 2023, Mr Belling contacted another client by email to ascertain the client's intentions regarding upcoming work. The contact person, Ms Harvey, sent a response in the following terms: Thank you for reaching out, we will no longer require the services of Moore Australia. Thank you for your assistance over the years: EPB 56. 1. Mr Belling contacted a further client on 1 May 2023 regarding that client's intentions and received an email from Mr Muscat in response in the following terms: I have engaged different firm for the audit this year. Apologies I did not reply to your earlier email: EPB 59. 1. On 12 May 2023, an internal ProYou Audit email from Mr Jones to Mr Cox contained the subject line "Charles is back on Moore website as a partner… wonder if HR told them to put him back on". This email and the subject line Mr Oosthuizen sought to link with a snapshot of a photo of a form of Moore Australia webpage showing a photo of him with the title "Director". Mr Oosthuizen submitted that this showed him on the Moore website as at 12 May 2023. However, he accepted that the photo itself bears no date but only apparently a time of day: T 42-43. 2. However, significantly, Mr Oosthuizen, gave evidence in his affidavit as follows: In May 2023 I decided that I had no other option, as the partners had ceased any meaningful correspondence with me, so I began to trade in my own right: ACO [32]. 1. On 16 May 2023, Mr Channell in his capacity as General Manager of Moore sent a letter to Mr Shaw headed "Notice of breach of contract" asserting that he was in breach of his employment contract with Moore and stating inter alia: It has come to our attention that your current employer is providing auditing services to clients who were Moore clients during the period of your employment: EPB 43. 1. On 18 May 2023, Mr Belling sent an email to Mr Matchett on behalf of a client of Moore. 2. The email in part stated: If you have not already been made aware, there have been several changes, at a firm level since we last corresponded. Charles and Mark have left the firm, re-joining our former colleagues at ProYou. As such, I have assumed the engagement partner responsibilities on all of the audits that Charles looked after: EPB 61. 1. On 19 May 2023, Mr Matchett responded to Mr Belling' email in terms which included the following: We heard about the things happening at Moore and I have discussed with the Brothers as to what to do. They leaned towards staying with the same engagement partner we have had over these many years, and so we have decided to engage ProYou Audit for the upcoming audit. Mark will be looking after us as he has done in past years: EPB 61. 1. On 22 June 2023, the plaintiffs' solicitors sent a letter to Mr Oosthuizen asserting that he was in breach of the partnership agreement and citing various background matters and demands. 2. The letter, inter alia, asserted that he had resigned from the partnership on 6 May 2022 and recited what was said to be "known breaches" of the partnership agreement: EPB 63-67. Retirement status issue 1. The evidence is suggestive that Mr Oosthuizen continued to have involvement in the work of the firm after 6 May 2022. However, there are competing contentions as to what occurred. The factual dispute is stark and suggests that the parties at least for the time being are perceiving their dispute in alternate realities to one another. 2. The plaintiffs assert that on 12 May 2022, the partners other than Mr Oosthuizen met and agreed to accept what they say was his resignation effective from 1 July 2022. 3. The first plaintiff, Mr Breedon, states that between 1 July 2022 and 31 December 2022, Mr Oosthuizen was "directed and engaged" in transitioning his clients, files and responsibilities to Mr Belling, a member of the audit and assurance team. Mr Breedon states that Mr Oosthuizen's last day with the partnership was 31 December 2022: APB [15], [16]. 4. Mr Sykes submitted that Mr Oosthuizen had resigned from the partnership on 6 May 2022 which resignation took effect as of 30 June 2022 such that his last date as a partner was 30 June 2022 and he ceased to be a partner as of 1 July 2022. Further, based on clause 18 of the partnership agreement, he submitted that there was a 26 week notice period or "transition period" during which Mr Mr Oosthuizen continued to work between 1 July 2022 and 31 December 2022 so that the departure date was 1 January 2023: T 14-15. 5. Following some debate on the issue, Mr Sykes acknowledged that it may be that the departure date (being the date that Mr Oosthuizen ceased to be a member of the partnership) was 1 July 2022 and that any two-year period for a restraint commenced from 1 July 2022. 6. Mr Oosthuizen contended (somewhat to the surprise of Mr Sykes) that he had not retired or resigned from the firm and remained an existing partner of the firm: T 40. In particular, Mr Oosthuizen: 1. submitted that the plaintiffs had not proved that he had resigned in a form as required by the partnership agreement: T 16, 55; 2. disputed that his email (sent on 14 September 2022) amounted to or constituted formal evidence of resignation: T 33. 3. submitted that the material suggesting that he had retired or resigned constituted, in substance, isolated emails out of context and he did not have access to materials to provide the proper context: T 34; 4. claimed that on 15-22 December 2022, the partnership "cut me off from access to everything, at that point of time, I was a partner, an equity partner. There was no formal resignation, there was no formal handover and there had been no new partner recruited for me to hand over a client base to": T 39.9-13; 5. stated that in February 2023, he offered to the plaintiffs to "hand over the client base": T 40 and 6. stated that as at the end of May 2023, he was on the Moore website as an existing partner of the firm and that the website had not been updated: T 34. 1. Despite Mr Oosthuizen's submissions, Mr Sykes submitted that the plaintiffs' primary case is that Mr Oosthuizen has resigned. Nonetheless, Mr Sykes submitted that if he had not resigned then the evidence would demonstrate that he was in breach of other clauses of the partnership agreement relating to existing partners (specifically clauses 13 and 16): T 53-54. 2. Mr Oosthuizen, despite evidentiary material suggesting that on 6 May 2022 he announced a resignation, disputes that even to this point of time he has in fact resigned. 3. Mr Oosthuizen states that he continued to work in the partnership for the period 1 July 2022 to 31 December 2022 which he asserts "would cover the 26 week notice period required under the partnership agreement if I was deemed an exiting partner": ACO [12]. 4. During this time, he states that in this time (in context 1 July 2022-31 December 2022) he was: … open to using this time to assist in the transition of clients and attempted to open new service lines to continue to bring value to the partnership and I continue to present fee proposals and win new audit work as the engagement partner: ACO [13]. 1. I pause to observe that Mr Oosthuizen's submission that he had not resigned from the partnership one might think sits somewhat uneasily with the letter dated 15 December 2022 from Butlers Business Lawyers on behalf of Mr Oosthuizen. 2. Mr Oosthuizen's letter dated 8 February 2023 contains a number of assertions which appear to be complaints and criticisms directed to Mr Yu and makes claims not only in relation to his equity in the partnership but also seemingly the so-called expulsion of another party, Ms Pérez, from the partnership and comments regarding her equity. The letter makes a series of proposals or demands: ECO. 3. Despite the letter being signed by Mr Oosthuizen as "Partner Moore Australia NSW", the letter in particular concludes with two proposals (or demands) in the following terms which at the very least, on one view, provides evidence that from Mr Oosthuizen's perspective he perceived himself at that point to be an exiting partner. Specifically, I refer to item 6 and 7 as follows: 6. Hand over of my mobile phone and contact number to me as has customarily been allowed for all exiting partners in the past. 7. After the signing of a properly executed deed of settlement and payment, I undertake to hand over the laptop and swipe card and sign all documents to reflect my exit from the Moore NSW group. 1. There is evidence from the plaintiffs (Mr Yu) of a discussion in which he says Mr Oosthuizen resigned. There is evidence in which Mr Oosthuizen describes himself in terms of being an "exiting partner": ACO [12]. There is an email of Mr Oosthuizen in which he indicates that "[a]s from 1 July I am not an equity partner…": EPB 21. There are emails from third parties which I have recited above which are all suggestive of Mr Oosthuizen having severed connection with the firm in a manner consistent with resignation. There are emails and other minutes of the firm in which the firm records in documents or otherwise corresponds with clients on the basis that they perceive or understand that Mr Oosthuizen is no longer with the firm. 2. There is certainly an oddity arising from the competing positions as to whether Mr Oosthuizen has or has not resigned or retired from the firm. However, I do not need or propose to make any final determination about that. 3. I am comfortably satisfied that there is material which establishes a prima facie case that at least as at the time of the hearing Mr Oosthuizen had resigned from the firm. Construction issue 1. In relation to the construction of clause 21.3(a), Mr Sykes submitted that it had two parts. The first was a prohibition against soliciting, canvassing or seeking the custom of any person who is a client of the partnership. The second part he submitted did not relate to precluding any positive action of soliciting, canvassing or the like but simply to precluding Mr Oosthuizen providing goods and services to clients of the partnership. 2. I engaged Mr Sykes in submissions regarding the proper construction of clause 21.3(a). Mr Sykes made various submissions, including as I have noted referring to Geraghty v Minter. 3. Further, Mr Sykes submitted that an accounting firm's customer connection with its clients is a legitimate interest which may be protected irrespective of soliciting. He cited Birdanco Nominees Pty Ltd v Money (2012) 36 VR 341; [2012] VSCA 64 (Birdanco) at [2]-[5] per Maxwell P and at [41]-[45] per Robson AJA. 4. Specifically, he drew my attention to the commentary in JD Heydon, The Restraint of Trade Doctrine (3rd ed, 2008, LexisNexis Butterworths) (cited in Birdanco at [45]) noting that where there is a recurring need for an employee's services, a covenant may be appropriate, that the employer is in greatest danger when the employee must work closely with the customer for a long time in conditions of some confidentiality, and where the employee's services are the main part of the transaction. Robson AJA indicated that accountancy is perhaps the clearest example of such a case citing Canadian authority: at [45]. 5. It seems to me that the construction for which Mr Sykes contends regarding the provisions of clause 21.3(a) is distinctly arguable. Put simply, the argument is that it both includes a covenant against non-solicitation but also a covenant against competition per se. Breach issue 1. Mr Sykes submitted that there is a serious question to be tried with respect to a breach by Mr Oosthuizen of clause 21 of the partnership agreement and breach of fiduciary duties. His initial written submissions referred to a breach of clause 21.1: [26]. However, on the hearing of the matter, he did not rely upon clause 21.1 but rather on clauses 21.2(b), 21.3 (a) & (c). 2. The plaintiffs says that Mr Oosthuizen has breached the provisions of the partnership agreement and, in particular, in respect of the restraint relief relied upon in relation to: 1. proposed order 1, clause 21.3(a); 2. proposed order 2, clause 21.2(b) and 21.3(a); and 3. proposed order 3, clause 21.3(c). 1. In particular, Mr Sykes, in seeking to establish a case of breach, relied upon the correspondence with the five clients stemming in each case from Mr Belling's emails dated 21 March 2023 and the client responses as I have set out above. Further, he relied upon the email that Mr Oosthuizen had sent to Ms Hodgson: EPB 44. He submitted that ProYou Audit is plainly a competitor it being an accounting practice and that Mr Oosthuizen's email (EPB 44) demonstrates that "the services offered by ProYou Audit are similar to his position as part of the partnership". He submitted that that email went beyond notifying Ms Hodgson of his departure but rather offered services in a way contrary to the terms of the partnership agreement. To the extent that Mr Sykes underpinned his arguments by reliance upon clause 21.2(b), I observed that clause 21.2 had no restraint period limit (as distinct from clause 21.1 and clause 21.3). Mr Sykes accepted that and, as I understood him, accepted that a restraint strictly in terms of clause 21.2(b) seemed too broad in terms of reasonableness of time (having regard to the absence of a time period): T 23.16-30. In substance, he acknowledged that the clause may have to be read down. 2. Mr Oosthuizen made various submissions. In summary, they included the following matters: 1. The plaintiffs had provided insufficient evidence demonstrating that he had solicited any clients of the firm: T 46, 48. 2. His email to Ms Hodgson (EPB 44) simply stated facts and he was purely offering to help in transitioning a client if need be: T 46. 3. The email of Ms Wells (EPB 46) simply evidences a client indicating that she wished to remain with him as the firm's partner: T 47. 4. That 21 March 2023 (nine months after his alleged resignation) was the first time that the plaintiffs had made any contact with the clients of the partnership with regards to anything relating to an outgoing partner and the plaintiffs by their own admission had not gone through the process of transitioning clients: T 44. This, he submitted, demonstrated that the plaintiffs had not followed any of their own protocols or processes to establish him as an outgoing partner: T 45. 5. He had only started contacting the plaintiffs' clients as the plaintiffs had not started contacting them at all after "that point": T 3. 1. Separately to contacting clients, Mr Oosthuizen asserted that he was still a partner of the firm and that the firm was holding him out to be a partner and that clients of the firm wished to remain with him as the partner of the firm they had known in order to complete or do work, but the firm had frozen him out from any work to do including access to emails or the office or any access to clients: T 48-49. 2. Mr Oosthuizen submitted that as a consequence of the above the plaintiffs had not come to Court with "clean hands" and were themselves in breach of the partnership agreement: T 45-46, 55. 3. In assessing the reasonableness of clause 21.3(a) regarding the restraint against competition I have had regard to the principles I have set out above regarding covenants against competition and assessment of them in light of other covenants regarding non-solicitation. 4. I have also had regard to the fact that the work of the firm is accountancy work in which an accountant skilled in auditing is in many respects arguably the "human face" of the business to the customer. 5. There is evidence bearing upon a prima facie case of breach by Mr Oosthuizen. This includes the correspondence with Ms Hodgson and other contact persons that I have recited above. Leaving aside Mr Oosthuizen's dispute regarding whether he is associated or connected with ProYou Business Advisory, there is material from which one might infer that he is operating through ProYou Audit in providing services which are not for the benefit of the plaintiffs: EPB 21, 22, 24-25, 38, 44-45, 46, 54, 61. 6. I have referred to Mr Oosthuizen's contention that he is not in any way associated with ProYou Business Advisory. Nonetheless, the extract of the webpage materials does refer to "ProYou Advisory" and "ProYou Network": EPB 22. The webpage also under the heading "ProYou Audit Pty Ltd" gives photographs of each of Mr Oosthuizen described as "Director – Audit & Assurance" and of Mr Shaw described as "Trusted Advisor – Audit & Assurance". Below the photos there are summaries regarding the background of Mr Oosthuizen and Mr Shaw: EPB 24-25. 7. More particularly, there is a statement regarding Mr Oosthuizen in the following terms: Currently, Charles is leading the audit division at ProYou, where he oversees a team of experienced professionals that provides a full range of audit and assurance services to clients across diverse industries: EPB 25. 1. As noted above, significantly, Mr Oosthuizen gave evidence in his affidavit that "in May 2023 I decided that I had no other option, as the partners had ceased any meaningful correspondence with me, so I began to trade in my own right": ACO [32]. 2. I am comfortably satisfied that there is material which establishes a prima facie case that at least as at the time of the hearing Mr Oosthuizen is in breach of clauses 21.2(b), 21.3 (a) & (c). However, I note that the extent of any restraint based on clause 21.2(b) may have to be read down. 3. Even if it be found that Mr Oosthuizen has not resigned and he is not properly described as being an "outgoing partner" there is evidence that establishes a prima facie case of breach of other provisions of the partnership agreement, in particular, clauses 8, 13 and 16(h). Restraint of ProYou Audit issue 1. I enquired of Mr Sykes what he asserted to be the basis for restraining ProYou Audit. Initially, he raised a number of different principles: T 26. 2. I raised with Mr Sykes the fact that there were a number of legal principles which seem to bear upon the matter. 3. Heydon states that the covenantor cannot evade the covenant by carrying on business under a title or by forming a limited company which is a mere veil for the covenantor's own activities, or by using a nominee for this purpose: The Restraint of Trade Doctrine (4th ed) at 329-330. 4. In relation to the use of a limited company, Heydon cites Gilford Motor Co Ltd v Horne [1933] Ch 935; [1933] All ER Rep 109 with the observation that so far as that decision rests on the doctrine of sham the reasoning is unsatisfactory: The Restraint of Trade Doctrine (4th ed) at 329 fn 279. 5. Heydon notes (at 329 fn 279) that the basis for restraining a company or corporation formed by the covenantor or under which the covenantor is trading has been subsequently founded on other legal doctrine including: 1. agency: see ICT Pty Ltd v Sea Containers Ltd (1995) 39 NSWLR 640 at 655-656 per Clarke, Handley and Sheller JJA; 2. the idea that a company formed for the, or a dominant, unlawful purpose of assisting the covenantor to break the covenant should be restrained from doing so: e.g. Metcash Ltd v Jardim (No 3) [2010] NSWSC 1096; (2010) 273 ALR 407 at [63]-[69] per Ball J; and 3. the need to prevent evasion of the law by obtaining a benefit from the separate legal personality of the company: Prest v Petrodel Resources Ltd [2013] 2 AC 415 at [29] per Lord Sumption (Lord Mance and Lord Clarke agreeing). 1. Further, Heydon observes that an injunction would lie against the limited company which is the alter ego or agent, but not damages for breach of a contract to which it was not a party: at 330 fn 279 citing inter alia H & R Block Ltd v Sanott [1976] 1 NZLR 213 at 220 per Somers J. Some of the provisions of clause 21 insofar as they set out restraints contain wording to the effect that the "outgoing partner" will not "directly or indirectly do certain things": e.g. clause 21.1, 21.3 (c) & (d). 2. Other provisions of clause 21, however, do not include that wording: e.g. clause 21.2 (b) and 21.3 (a) & (b). 3. Further, it has been observed that a corporate entity with which a covenantor is associated might be restrained to prevent threatened conduct which would involve a contempt of the Court's orders against the covenantor, it being a contempt to engage in conduct which knowingly prevents an order of the Court achieving its intended object: e.g. Jardin and v Metcash Ltd [2011] NSWCA 409; (2011) 285 ALR 677 at [124] per Meagher JA citing inter alia Seaward v Paterson [1897] 1 Ch 545 at 555 per Lindley LJ; Reid v Howard (1993) 31 NSWLR 298 at 308-309 per Handley JA (Meagher and Sheller JJA agreeing); Cardile v LED Builders Pty Ltd (1999) 198 CLR 380; [1999] HCA 18 at [30] per Gaudron, McHugh, Gummow and Callinan JJ; Zhu v Treasurer of the State of NSW (2004) 218 CLR 530; [2004] HCA 56 at [121] per Gleeson CJ, Gummow, Kirby, Callinan and Heydon JJ. 4. Mr Oosthuizen gave evidence that the sole reason for registering ProYou Audit was to conduct the business described in his business plan which he had proposed to the partnership: ACO [16]. Further, he stated that the opening of ProYou Audit was to conduct new business lines which was a standard procedure for the continuing partners, and he noted that the continuing partners had established a new audit company when they introduced a new audit partner in April 2022 "without my prior knowledge": ACO [17]. 5. Mr Oosthuizen developed submissions on this asserting that it was due to ongoing disputes with the plaintiffs that his business plan never got off the ground: ACO [18]-[19]. Mr Oosthuizen disputed that Mr Shaw was an employee or otherwise associated with ProYou Audit: T 51. Restraint relief Prima facie case 1. I have addressed the factual material and matters relevant to a prima facie case in respect of the Retirement status issue, the Construction issue and Breach issue above. I am satisfied that there is a prima facie case in respect of those issues. 2. Further, in respect of the Restraint of ProYou Audit issue I am satisfied that there is prima facie evidence of breach both by himself directly and also through ProYou Audit. Balance of convenience 1. Mr Sykes referred to the decision of Richmond J in KPW Law Pty Ltd v Patel [2023] NSWSC 617 at [42]-[43]: 42. In relation to the balance of convenience, it is necessary to consider what course is best calculated to achieve justice between the parties, bearing in mind the consequences to the defendant of the grant of the injunction in support of relief which the plaintiff might not ultimately obtain and the consequences to the plaintiff of refusing the injunction in support of relief which it might ultimately be held to be entitled: Kolback Securities Ltd v Epoch Mining NL (1987) 8 NSWLR 533 at 535. Relevant matters to be taken into account include whether damages are an adequate remedy; the defendant's right to a livelihood, delay, the impact on third parties; whether the employee was warned and went into the position with "eyes wide open"; whether any hardship that would be visited on the defendant has come about because he or she is the author of his or her own misfortune; the strength of the case; and any undertakings that have been given: HiTech Group Australia Ltd v Riachi [2021] NSWSC 1212. 43. In relation to the adequacy of damages, it is often said that damages are rarely an adequate remedy for breach of a negative contractual stipulation: Birt at [45]. In Emeco International Pty Ltd v O'Shea [2012] WASC 282, Edelman J (as his Honour then was) explained that the reason why this is so includes the difficulty of the detection of breaches of the obligation, the difficulty of establishing causation between any loss of business with customers and any actions of the ex-employee and the difficulty of the calculation of the quantum of any damage arising from loss of business. However, his Honour noted at [22] that these concerns would not always apply. An example of where, despite difficulty of calculation, damages for breach of a restraint on trade were held to be an adequate remedy is Smith v Ryngiel [1988] 1 Qd R 179 at 187–190. 1. He submitted that the balance of convenience favours the granting of the injunction because damages are an inadequate remedy, the plaintiffs' case is a strong one, and the terms of clause 21 are plain on their face such that Mr Oosthuizen went into "the new role with his eyes open and aware of the restrictions" and declined to give requested undertakings: EPB 64-67. 2. Mr Sykes also submitted that there is no evidence of any hardship likely to be caused to the defendants. 3. Mr Oosthuizen in his affidavit does address aspects of hardship. 4. He stated that he had not had any source of income since December 2022: ACO [24]. 5. Further he stated as follows: 26. The Continuing Partners are aware of my financial situation and know that any delay will have a significant impact on my financial position and my ability to hold standing with the Chartered Accountants Australia and New Zealand and as a Registered Company Auditor with ASIC and therefore reduce my ability to earn income in my chosen profession. 27. The ongoing uncertainty surrounding the value of my equity and timing of any payment of said equity from the Continuing Partners has put severe financial hardship on myself and my family. 28. The Continuing Partners have had 12 months since my alleged 'resignation' to value the business and make plans to may me in accordance with this valuation. 29. I have not been able to work in my chosen career due to the inaction of the Continuing Partners. 30. I have been forced to sell assets such as my motor vehicle to cover living expenses. 31. I have tried to engage the services of a solicitor to commence action against the partnership to get my equity value however, given the nature of litigation without a source of income it is impossible to commence proceedings due to the cost involved. 32. In May 2023 I decided that I had no other option, as the partners had ceased any meaningful correspondence with me, so I began to trade in my own right. 33. I have done the only thing possible to provide for my family and retain whatever reputation I still have within the industry. 1. I note that paragraphs [26]-[29] were admitted as evidence not of the truth of the matter but as Mr Oosthuizen's contention limited in that way pursuant to s 136 Evidence Act. 2. Mr Breedon referred to the resignation of Mr Shaw: APB [19]-[22]. I leave that matter to one side. I am not satisfied that there is a prima facie case that Mr Oosthuizen has breached the partnership agreement by procuring the resignation of Mr Shaw. 3. Mr Breedon gave particular evidence of clients leaving Moore and gave some estimates of how that might affect the revenue of the partnership going forward: APB [23]-[28]. He stated that since Mr Oosthuizen's departure numerous other long-standing clients have contacted Moore and "informed us of their plans to leave for another firm or to follow Charles or Mark to their new firm": APB [24]. Although, it must be said that the evidence regarding such clients at least at this point does not appear to be aptly described as "numerous". 4. I accept that there is a prima facie case that the plaintiffs have suffered and might be expected to suffer some degree of financial loss. I also accept that there is prima facie evidence that Mr Oosthuizen has suffered or may suffer some financial hardship. 5. Overall, I am satisfied that injunctive relief is appropriate, and I set out the orders I made below regarding this. Production relief 1. Mr Sykes sought to ground the production relief in what he said were Mr Oosthuizen's obligations under the partnership agreement. I consider that production relief is more specifically underpinned by a legislative provision such as s 68 CPA and the Court's other powers to require production of documents. For the above reason, I made the orders in respect of the production relief. Expedition of the final hearing 1. None of the parties appeared to have expressly turned their minds to the issue of expedition of the hearing of the proceedings. 2. In light of the nature of the case and the fact that all of the parties appeared to contend that they are suffering financial hardship it seemed to me that the matter is really one which on all sides needs to be dealt with as soon as reasonably can be done. For that reason, I ordered that the matter be listed in the next available Expedition List before the Expedition List Judge. Conclusion 1. The orders I made were as follows: 1. Orders that Confidential Exhibit PB-2 be made available to Mr Oosthuizen for the purposes of addressing the relief sought against him in the proceedings. 2. Subject to further order of the Court, as an interim order applying throughout the Commonwealth, until the trial or final hearing of the proceedings order pursuant to s 8(1)(a) of the Court Suppression and Non-Publication Act 2010 (NSW), a suppression order prohibiting the disclosure of the information in Confidential Exhibit PB-2 by Mr Oosthuizen to any person other than a legal representative, if any, that may act in his interest but only on the basis that the legal representative is not to otherwise disclose such material. 3. Upon the plaintiff by its counsel giving to the Court the usual undertaking as to damages: 1. Orders that, until further order, the first defendant by himself, his servants, his agents or otherwise be restrained from soliciting, canvassing or in any way whatsoever seeking the custom of the people listed in Confidential Exhibit PB-2. 2. Orders that, until further order, the first defendant by himself, his servants, his agents or otherwise be restrained from providing accounting, auditing, corporate advisory or other services provided by the plaintiffs to the people listed in Confidential Exhibit PB-2. 3. Orders that, until further order, the first defendant by himself, his servants, his agents or otherwise be restrained from approaching, directly or indirectly, any client of Moore Australia (NSW) to influence the said client to cease to be a client of the Moore Australia (NSW) or otherwise entice him or her to away from Moore Australia (NSW). 4. Orders that, until further order, the second defendant by itself, its servants, its agents, its employees or otherwise be restrained from soliciting, canvassing or in any way whatsoever seeking the custom of the people listed in Confidential Exhibit PB-2. 5. Orders that, until further order, the second defendant by itself, its servants, its agents, its employees or otherwise be restrained from providing accounting, auditing, corporate advisory or other services provided by the plaintiffs to the people listed in Confidential Exhibit PB-2. 6. Orders that, until further order, the second defendant by itself, its servants, its agents, its employees or otherwise be restrained from approaching, directly or indirectly, any client of Moore Australia (NSW) to influence the said client to cease to be a client of the Moore Australia (NSW) or otherwise entice him or her to away from Moore Australia (NSW). 1. Orders that the first defendant and the second defendant are to produce all correspondence between them and the people listed in Confidential Exhibit PB-2 from 1 January 2023 to the date of these orders on or before 4.00 PM 14 days after the date of these orders. 2. Orders that the matter stand over to the Expeditions List before the Expedition List Judge at 10:00am on Friday 7 July 2023. 3. Orders that costs be reserved. 4. Orders that the orders be entered forthwith. ********** 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: 24 July 2023