Sprout Trading NSW Pty Ltd trading as Sprout Ag v PBH Trading Pty Ltd [2024] NSWSC 1647

Supreme Court New South Wales

Medium Neutral Citation: Sprout Trading NSW Pty Ltd trading as Sprout Ag v PBH Trading Pty Ltd [2024] NSWSC 1647 Hearing dates: 19-22 November 2024 Date of orders: 19 December 2024 Decision date: 19 December 2024 Jurisdiction: Equity Before: Hmelnitsky J Decision: 1. The parties are to bring in short minutes of order to give effect to my reasons on or before 7 February 2025. 2. The parties are to file and serve any evidence and short submissions on costs on or before 7 February 2025. 3. The parties are to file and serve any evidence and short submissions in reply on the question of costs on or before 14 February 2025. Catchwords: EMPLOYMENT AND INDUSTRIAL LAW — Contract — Restraint of trade — Where there was a Services Agreement between the plaintiff and the first defendant — Where a restraint clause in favour of the plaintiff bound the defendants to certain obligations — Whether the defendants breached the restraint clause by "soliciting", "canvassing", "securing", "diverting" or "attempting to divert" former clients of the plaintiff to themselves or a third party after Services Agreement terminated — Where most former clients approached second defendant after termination of the Services Agreement for assistance — Whether "secure" or "divert" could capture a passive receipt of instructions from a former client — Whether restraint clause was valid under s 4 of the Restraints of Trade Act 1976 (NSW) — Whether restraint clause was reasonable — Whether plaintiff had a legitimate protectable interest — Where plaintiff was franchisee under a Franchise Agreement — Where second defendant knew most former clients personally, long before Services Agreement entered into EQUITY — Fiduciary Duties — Whether a fiduciary duty existed between plaintiff and the defendants — Whether defendants breached a fiduciary duty by doing work for former clients of the plaintiff — Whether obligations subsisted beyond the termination of the relationship Legislation Cited: Restraints of Trade Act 1976 (NSW), s 4 Cases Cited: Agricultural Land Management Ltd v Jackson (No 2) (2014) 48 WAR 1; [2014] WASC 102 Amoco Australia Pty Ltd v Rocca Bros Motor Engineering Co Pty Ltd (1973) 133 CLR 288; [1973] HCA 40 Ancient Order of Foresters in Victoria Friendly Society Ltd v Lifeplan Australia Friendly Society Ltd (2018) 265 CLR 1; [2018] HCA 43 Anderson v Canaccord Genuity Financial Ltd (2023) 113 NSWLR 151; [2023] NSWCA 294 Avtex Airservices Pty Ltd v Bartsch (1992) 107 ALR 539 Barrett v Ecco Personnel Pty Ltd (Court of Appeal (NSW), 24 November 1998, unrep) Belflora Pty Ltd v Vinflora Pty Ltd (2021) 106 NSWLR 67; [2021] NSWCA 178 Birtchnell v Equity Trustees, Executors & Agency Co Ltd (1929) 42 CLR 384; [1929] HCA 24 Canadian Aero Service Ltd v O'Malley [1974] SCR 592 Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337; [1982] HCA 24 Commissioner of Taxation (Cth) v Murry (1998) 193 CLR 605; [1998] HCA 42 Federal Commissioner of Taxation v Williamson (1943) 67 CLR 561; [1943] HCA 24 Geraghty v Minter (1979) 142 CLR 177; [1979] HCA 42 Grimaldi v Chameleon Mining NL (No 2); Chameleon Mining NL v Murchison Metals Ltd (2012) 200 FCR 296; [2012] FCAFC 6 Hellmann Insurance Brokers v Peterson [2003] NSWSC 242 Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41; [1984] HCA 64 IceTV v Ross [2007] NSWSC 635 In the matter of Sunnya Pty Ltd [2024] NSWSC 403 Isaac v Dargan Financial Pty Ltd ATF The Dargan Financial Discretionary Trust (ABN 68 702 047 521) (trading under the name of Home Loan Experts) (2018) 98 NSWLR 343; [2018] NSWCA 163 Koops Martin Financial Services Pty Ltd v Reeves [2006] NSWSC 449 Lindner v Murdock's Garage (1950) 83 CLR 628; [1950] HCA 48 Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd (2015) 256 CLR 104; [2015] HCA 37 Narellan Franchise Pty Ltd v RBME Pty Ltd [2022] NSWSC 988 Nicholls v Michael Wilson & Partners Ltd [2012] NSWCA 383Howard v Federal Commissioner of Taxation (2014) 253 CLR 83; [2014] HCA 21 Planet Fitness Pty Limited v Brooke Dunlop [2012] NSWSC 1425 Reardon Smith Line Ltd v Hansen-Tangen [1976] 1 WLR 989 Stacks Taree Pty Ltd v Marshall (No 2) [2010] NSWSC 77 Streetscape Projects (Australia) Pty Ltd v City of Sydney 85 NSWLR 196; [2013] NSWCA 2 Tullett Prebon (Australia) Pty Ltd v Purcell [2008] NSWSC 852; (2008) 175 IR 414 Texts Cited: Evans, Power and Power, Equity and Trusts, (LexisNexis, 5th Edition, 2024) JD Heydon, MJ Leeming and PG Turner, Meagher, Gummow & Lehane's Equity: Doctrines & Remedies (LexisNexis, 5th Edition, 2015) Category: Principal judgment Parties: Sprout Trading NSW Pty Ltd t/as Sprout Ag (Plaintiff) PBH Trading Pty Ltd (First Defendant) Peter Lance Hollingworth (Second Defendant) Representation: Counsel: D Neggo (Plaintiff) R Notley (First and Second Defendants)