Hannaford v Cactus Imaging Pty Ltd [2008] NSWCA 260

New South Wales Court of Appeal

CITATION: Hannaford v Cactus Imaging Pty Ltd [2008] NSWCA 260

HEARING DATE(S): 13 October 2008

JUDGMENT DATE: 13 October 2008

JUDGMENT OF: McColl JA at 1

EX TEMPORE JUDGMENT DATE: 13 October 2008

DECISION: See [14].

CATCHWORDS: PRACTICE AND PROCEDURE - application for expedition of appeal - applicant restrained by injunction from engaging in certain employment said to be in breach of restraint of trade clause - risk of loss of livelihood to applicant if expedition not granted.

CATEGORY: Procedural and other rulings

CASES CITED: Elders Rural Finance Limited v Smith (1995) 38 NSWLR 395

PARTIES: Bradley William Hannaford - Applicant Cactus Imaging Pty Ltd - Respondent

FILE NUMBER(S): CA 40324 of 2008

COUNSEL: Mr A J Sullivan QC and Mr M J Darke - Applicant Mr M J Steele - Respondent

SOLICITORS: Allens Arthur Robinson - Applicant Somerville & Co - Respondent

LOWER COURT JURISDICTION: Supreme Court - Equity Division

LOWER COURT FILE NUMBER(S): SC 4641 of 2008

LOWER COURT JUDICIAL OFFICER: Rein J

LOWER COURT DATE OF DECISION: 22 September 2008

IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40324/08

McCOLL JA Monday 13 October 2008 BRADLEY WILLIAM HANNAFORD v CACTUS IMAGING PTY LIMITED JUDGMENT Ex Tempore 1 McCOLL JA: The Court has before it an application for expedition made pursuant to a Notice of Motion filed on 3 October 2008. The Motion seeks both expedition of the Summons seeking leave to appeal and, if leave to appeal is obtained, that the hearing of the appeal itself be expedited. In the course of submissions, Mr A J Sullivan of Queen's Counsel who appears with Mr M J Darke for the applicant, submitted that if expedition of the leave application were granted, there should be a concurrent hearing of the applications for leave and if granted, the appeal. 2 Mr M J Steele, who appears for the respondent, does not oppose the application, but he does not consent to it for various evidentiary reasons to which I will come. 3 The proceedings from which leave to appeal is sought, were commenced by the respondent against the applicant in the Equity Division on 10 September 2008. On 22 September 2008, Rein J ordered, inter alia, that the applicant be restrained until further order, from continuing his employment with, being employed by, or providing his services as an employer or otherwise, to a company called, Omnigraphics Australia Pty Ltd or any of its related entities. On 26 September, Palmer J made an order for expedition of the first instance proceedings. They are now fixed for hearing on a final basis before Brereton J on the 18–19 February 2009. As a condition of obtaining interlocutory relief, the respondent gave the usual undertaking as to damages. 4 The restraint of trade clause which Rein J enforced, operated for twelve months. The effect of the interlocutory injunction is that the applicant is restrained for the period July 2008 to July 2009, from engaging in employment within the terms of that injunction. 5 The application for expedition is made on two bases both based on the premise that the applicant has prospects of success on appeal – a subject which was touched on. The first is the financial hardship which the restraint imposes upon the applicant. The second basis is the practical futility of the appeal if expedition is not granted and an appeal is not heard until some time in March 2009 – the current foreshadowed date from which hearing dates could be allocated, assuming expedition is not granted. The Summons seeking leaving to appeal has been listed for directions only on 1 December 2008. 6 The applicant relies on two affidavits of Mr Jonathan Dooley, the first sworn 3 October 2008, the second on 13 October 2008. I will not detail the evidence of the applicant's financial circumstances, which he sets out. It is sufficient to note that he summarises the applicant and his partner's total outgoings on a monthly basis as being $8,718 and their joint income as at 21 September 2008 as being $10,488, on the basis, I assume, that he was then employed by Omnigraphics. The effect of the injunction is that he must cease his employment with Omnigraphics and hence his income would cease. 7 Mr Dooley's affidavit proceeds on the hypothesis that if the applicant found employment consistently with the injunction outside his usual area of work, then he would earn less than he would in his employment with Omnigraphics or pursuing his usual occupation. On that basis, his total income would be about $7,800 and he would suffer a shortfall of about $350 a month. Even if he was able to find another source of finance, as time passed, it would become increasingly likely that he would have to sell the house he and his partner purchased in April 2008. 8 Mr Dooley's second affidavit discloses that the applicant's employment with Omnigraphics was terminated on or about 23 September 2008. On 24 September, he received a termination payment of $18,108 which will meet expenses for the three-months up to December 2008. Mr Dooley said, as a consequence, the deterioration in the applicant's financial position to which I have referred would not commence until December 2008. 9 I do not pretend to fully understand the issues which are going to arise on the appeal. As I have said, the prospects of success were not canvassed in depth. Mr Sullivan has outlined the issues. Not having had access to Rein J's judgment, I hope I do no injustice to Mr Sullivan's submissions or Rein J's judgment if I say that as I understand in essence, the critical issues on appeal will turn on the approach to the construction of the restraint of trade clause and on an issue of confidential information, and whether and to what extent the respondent demonstrated that the applicant was in possession of any information such as would attract interlocutory relief. There were other grounds relied on in relation to the admission of evidence and the application of an earlier decision of Brereton J, apparently involving the same respondent. However, the critical issues seem to be those of the restraint of trade clause, and confidential information. 10 Mr Steele, in essence, submits that the evidence does not fully disclose that the applicant would suffer financial hardship, at least not before February next year, when Brereton J will finally hear the substantive proceedings. While he accepts that the applicant would be justified in being concerned about the precarious financial position he or his partner may be in, in relation to continuing payments in respect of their mortgage commitments, he points out firstly, that those issues will not materialise until December this year, particularly, as I understand it, having regard to today's evidence of the termination payment. He also relies on my taking judicial notice of the fact that interest rates have declined and that the likely effect of that on the applicant and his partner's mortgage payments would be to reduce them to such an extent that there may in fact no longer be a deficiency of the nature of that to which Mr Dooley referred in his earlier affidavit. 11 In short, I think the essence of Mr Steele's submission was that the evidence did not establish any significant financial hardship until at least January 2009 and also did not establish that the applicant did not have access to any other assets. He also pointed out that, to the extent of prejudice, the applicant was protected by the undertaking of the damages to which I have already referred. As to the question of futility, he says that if the matter is heard and determined by Brereton J in February, the restraint of trade would only have run for eight of its twelve months' duration. 12 The principles as to when the Court might order expedition of an appeal, are, as Mr Sullivan helpfully reminded the Court, set out in Elders Rural Finance Limited v Smith (1995) 38 NSWLR 395. The Court has to take into account that granting expedition may push other litigants who have been already waiting in the queue down the line, but also the fact that there are some cases where it is appropriate that notwithstanding the disadvantage caused to other litigants, an expedited hearing may be appropriate. Such a case is that referred to in Elders (at 401), where a party may lose their livelihood, business or home, or suffer irreparable loss or extraordinary hardship. 13 The critical issue in this case, in my view, is the futility of the appeal if expedition is not granted, and the fact that in the present economic climate, a person should not be deprived of the opportunity to exercise their earning capacity due to a possibly improperly ordered restraint or interlocutory injunction, pending an appeal hearing that might not take place until March next year. In my view expedition ought be ordered. 14 I make the following orders.