The Independent Liquor Group Distribution v Andrew Clement [2007] NSWSC 1507

New South Wales Supreme Court

CITATION : The Independent Liquor Group Distribution v Andrew Clement [2007] NSWSC 1507

HEARING DATE(S) : 23 November 2007 JUDGMENT OF : McDougall J at 1

EX TEMPORE JUDGMENT DATE : 23 November 2007

DECISION : See paragraphs [39], [40], [45] and [46] of the judgment

CATCHWORDS : CONTRACTS – restraint of trade – plaintiff seeks enforcement of restraint of interlocutory relief – whether restraint a term of defendant's employment – whether first employment agreement continued to bind defendant – whether term asserted too wide – balance of convenience – Costs.

LEGISLATION CITED : Restraint of Trade Act 1976 Section 4A of the Liquor Act (NSW) 1982

CASES CITED : Brambles Ltd v Wail (2002) 5 VR 169 Leichhardt Municipal Council v Green [2004] NSWCA 341

PARTIES : The Independent Liquor Group Distribution Co-Operative Ltd ABN 70 252 541 400 (Plaintiff) Andrew Clement (Defendant)

FILE NUMBER(S) : SC 5536 of 2007

COUNSEL : T Saunders (Plaintiff) G J Hatcher SC / M Painter (Defendant)

SOLICITORS : Harmers Workplace Lawyers (Plaintiff) Thompson Playford Lawyers (Defendant)

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

McDOUGALL J

23 November 2007 (ex tempore – revised 28 November 2007)

5536/07 THE INDEPENDENT LIQUOR GROUP DISTRIBUTION v ANDREW CLEMENT JUDGMENT 1 HIS HONOUR: As its name suggests, the plaintiff (ILG) supplies alcoholic beverages to independent members of the liquor trade. It has done so for a number of years. It does so through a cooperative structure in which some 90 percent or more of those whom it supplies are members of the cooperative. 2 From about 28 October 2002 for a period of five years, the defendant (Mr Clement) was employed by ILG as a representative. His position title changed from time to time, but in essence his obligations over the period included servicing accounts in the western Sydney and Wollongong regions. 3 Mr Clement's employment with ILG came to an end on 29 October 2007. Although there is some dispute as to the precise circumstances in which it came to an end, there is no doubt that Mr Clement tendered his resignation, ILG accepted that resignation, and Mr Clement thereupon ceased to work for ILG. 4 Mr Clement has undertaken employment with Metcash Trading Limited, one of whose subsidiaries or divisions, known as Australian Liquor Marketers or ALM, is a competitor of ILG. ILG claims that Mr Clement is bound by restraints in his contract of employment in essence preventing him from undertaking most if not all incidents of that employment. It seeks to enforce those restraints through the grant of interlocutory relief. 5 Mr Clement's terms of employment with ILG were originally documented in a letter dated 4 October 2002, accepted by Mr Clement in writing on 28 October 2002. That letter said nothing as to any restraint of trade, although it did say if Mr Clement successfully completed a three month probationary period he would be offered a contract of employment which would detail all of the conditions of his employment. 6 Clearly, for ILG, the words "on successfully completing your probationary period" had some elastic content because the terms of employment were not offered to Mr Clement until about April 2003. On that date, he signed another agreement, which is the employment contract on which ILG relies in these proceedings. Although signed on 17 August 2003, it purports to have been made on 28 October 2002 and to have been effective from that date until 30 June 2004. 7 A number of terms in that agreement were the subject of debate. I do not propose to go to all of them. It is, however, necessary to set out the provisions of clauses 8, 14, (as to part) 15, 16, 17, 18, 23 and 24). 8. Subject to this Agreement, the term of this Agreement shall be for the period specified in Item 4 of the Schedule unless sooner terminated by either party during the original term (or any renewal term) by the giving of one (1) calendar months written notice to the other by hand or registered or certified mail, whereupon this Agreement shall terminate on the date specified in the notice. Prior to or at the end of the term of this Agreement, the parties will review the terms of the then current agreement with a view to seeking to reach agreement as to terms for a further period of employment but it is agreed and understood that nothing in this Agreement obliges either party to enter into a new agreement or to renew the employment. 14. The Employee hereby acknowledges: (a) that the work of the Co-operative is highly specialised and unique and that, notwithstanding that he will acquire certain information in the ordinary course of the Employment, the property of the Co-operative includes, and will include, all confidential information and all records, documents, accounts, plans, formulae, designs, specifications, price lists, customer lists, correspondence, records maintained in any data bank, computer memory, upon any hardware or in any other medium whatsoever and letters and papers of every description, including all copies of or extracts from the same, relating to the affairs or business of the Co-operative or any associated Co-operative or which may come into his possession in the course and by reason of the Employment, whether or not the same were originally supplied by the Co-operative (the "Co-operative's Documents"); (b) that the information contained in the Co-operative's Documents has been, and will be, acquired by the Co-operative or its associated companies at considerable effort and expenses;