Supreme Court New South Wales Medium Neutral Citation: Bis Industries Limited v Toll Holdings Limited & Anor [2012] NSWSC 1427 Hearing dates: 1, 2 and 6 November 2012 Decision date: 23 November 2012 Jurisdiction: Equity Division Before: Bergin CJ in Eq Decision: Restraints valid and enforceable Catchwords: [CONTRACT] - [RESTRAINT] - where two large organisations conducting negotiations for possible equity investment or purchase -where non-solicitation restraint agreed during due diligence regime - where due diligence process aborted after approximately three weeks - some confidential information provided - where approaches to employee made prior to entry into restraint - where employment secured after entry into restraint - whether restraint reasonable and enforceable - whether injunction should be granted. [EMPLOYEE RESTRAINT] - where employee renegotiates notice period under contract - where employee agrees to 6 months restraint - whether restraint reasonable and enforceable - whether injunction should be granted. Legislation Cited: Restraints of Trade Act 1976 Cases Cited: Attwood v Lamont [1920] 3 KB 571 Cactus Imaging Pty Limited v Peters [2006] NSWSC 717; (2006) 71 NSWLR 9 Esso Petroleum Co Ltd v Harper's Garage (Stourport) Ltd [1968] AC 269 Herbert Morris Ltd v Saxelby [1916] 1 AC 688 Jones v Dunkel (1959) 101 CLR 298 Kores Manufacturing Co Ltd v Kolok Manufacturing Co Ltd [1957] 3 All ER 158 Kores Manufacturing Co Ltd v Kolok Manufacturing Co Ltd [1958] 2 All ER 65 Miller v Jackson [1977] QB 966 News Limited v Australian Rugby Football League Ltd (1996) 64 FCR 410 Nordenfelt v Maxim Nordenfelt Guns & Ammunition Co Ltd [1894] AC 535 Patrick Stevedores No 2 Pty Ltd v Maritime Union of Australia (No 3) [1998] HCA 30; (1998) 195 CLR 1 Portal Software v Bodsworth [2005] NSWSC 1179 Seven Network (Operations) Ltd v Warburton (No 2) [2011] NSWSC 386; (2011) 206 IR 450 SST Consulting Services Pty Ltd v Rieson [2006] HCA 31; (2006) 225 CLR 516 Tullett Prebon (Australia) Pty Limited v Simon Purcell [2008] NSWSC 852 Texts Cited: Heydon, JD, The Restraint of Trade Doctrine (LexisNexis Butterworths, 3rd ed., 2008) Category: Principal judgment Parties: Bis Industries Limited (Plaintiff) Toll Holdings Limited (First Defendant) Deryl George Freeman (Second Defendant) Representation: Counsel: CRC Newlinds SC/MA Izzo (Plaintiff) MS White (First Defendant) N Manousaridis/A Poljak (Second Defendant) Solicitors: Corrs Chambers Westgarth (Plaintiff) Minter Ellison (First Defendant) Arns & Associates (Second Defendant) File Number(s): 2012/299977 Publication restriction: Nil Judgment 1The main issue for determination in this litigation is the enforceability of restraint clauses in two contracts. The first contract is between the plaintiff, Bis Industries Limited (BIS), and the second defendant, Deryl George Freeman (the defendant) (the employment contract). The second contract is between BIS and the first defendant, Toll Holdings Limited (TOLL) (the Confidentiality Deed). Background 2BIS was acquired by Kohlberg Kravis Roberts & Co in 2006. It operates numerous businesses, one of which is the transportation of mined and other raw materials by off road dual powered road trains (DPRTs). The majority of its operations in this business are in Western Australia through contracts with a number of mines throughout that State. It describes itself as the "leading provider of specialist logistics services to the resources sector in Australia". TOLL also operates a similar but, at this stage, much smaller-scale business in the transportation of raw materials by DPRTs, as a competitor of BIS in Western Australia. It is not in issue that as at May 2012 and at the date of trial BIS and TOLL were and are the main employers of DPRT haulage drivers and fitters in the DPRT services market in Western Australia. 3As at May 2012 TOLL was "not a very big player in this segment" of the DPRT market. However it has a seven-year strategy to grow its business in that market (tr 138). 4Another company, Gulf Transport Co Pty Limited (Gulf) also operated a similar business until BIS acquired it in December 2010. The defendant had previously been employed by BIS (then known as Brambles Australia Limited), from 3 July 2006 to 10 August 2007 as General Manager, Mining Services. He left that employment consequent upon a disagreement with the Regional Director. The defendant commenced his employment with Gulf on 2 June 2008. His position with Gulf at the time of the acquisition by BIS was General Manager for Western Australia. In that role he was responsible for the day-to-day management of Gulf's contracts with its Western Australian customers. The defendant was then employed with BIS from early 2011. In July 2012 he was offered employment with TOLL and gave BIS three months notice terminating the contract of employment on 31 October 2012. Proceedings 5BIS commenced these proceedings to restrain TOLL from employing the defendant and restraining the defendant from commencing his employment with TOLL. TOLL and the defendant claim that the restraint clauses in their respective contracts with BIS are unreasonable and unenforceable. There is an interlocutory inter partes arrangement in respect of the defendant's employment until these proceedings are concluded. 6The proceedings were heard on 1, 2 and 6 November 2012. Mr CRC Newlinds SC, leading Mr EM Izzo, of counsel, appeared for BIS. Mr MS White, of counsel, appeared for TOLL. Mr N Manousaridis, of counsel, leading Ms A Poljak, of counsel, appeared for the defendant. 7BIS relied on the affidavits of Bradley Rogers, Finance Director of BIS, sworn on 26 September 2012 (two), 17 October 2012 and 1 November 2012; Joseph Brian Thomas, Director of NSW and Queensland of BIS, sworn 23 October 2012; Michael William Anderton Stock, Managing Director of the Investment Banking Division of UBS Investment Bank, affirmed 16 October 2012; Kermit Jay Cook, Principal of KKR Capstone, affirmed 16 October 2012; Richard Briant, Director People and Organisation of BIS, sworn 26 September 2012; David Cox, Executive General Manager - WA Iron Ore of BIS, sworn 26 September 2012; and Graeme Ernest Brentson, General Manager - Contracts of BIS, sworn 31 October 2012. 8TOLL relied on the affidavits of Michael Roy Elmer, General Manager of Toll Mining Services, sworn 25 October 2012 (with a separate confidential section); Russell Baxter, National Fleet and Operations Development Manager of Toll Mining Services, sworn 26 October 2012; Kimberlea Helen-Jean Gibson, Corporate Development Manager of Toll Group, sworn on 25 October 2012 and 26 October 2012; Anthony Neil Bracken, National Operations and Project Development Manager of Toll Mining Services, sworn 24 October 2012; Christopher Denis John Yourell, Global Business Development Manager of Toll Mining Services, sworn 25 October 2012; and Gareth Frank Jolly, Partner of Minter Ellison lawyers, sworn 26 October 2012. 9The defendant relied on his own affidavits sworn on 25 October 2012 and 2 November 2012. EMPLOYMENT CONTRACT 10On 8 December 2010, after its acquisition of Gulf, BIS provided to the defendant (and a number of other former Gulf employees) a draft "Retention Agreement" pursuant to which BIS was to promise to pay the defendant an amount equivalent to 3 months base salary if he stayed in employment with BIS for a period of 12 months from the date BIS acquired Gulf. In addition, the defendant was to promise to inter alia "maintain customer and OEM relationships to ensure a smooth transition to BIS ownership" and to "ensure production levels on my site(s) of responsibility maintain or exceed contractual requirements with the client". 11The defendant met Michael Roy Elmer, the general manager of Toll Mining Services (a business unit of TOLL's operating division, Toll Global Resources) in 2010. In December 2010 and January 2011 Mr Elmer and the defendant discussed the possibility of the defendant working for TOLL. The defendant felt some loyalty towards the former owner of Gulf to stay on with BIS at least as long as the former owner of Gulf had agreed to do so, being the end of June 2012. Mr Elmer asked the defendant whether it was "ok" if he called him closer to 30 June 2012. The defendant advised Mr Elmer to give him a call at that time and "we'll see how everything is going". 12On 20 January 2011 the defendant signed the Retention Agreement with BIS. On 25 January 2011 the defendant and all former employees of Gulf were advised by BIS that as part of the transition of their employment from Gulf/Gulfploy to BIS they "must consent" to such transfer. 13In February 2011 the defendant received a draft employment contract from BIS. That draft included a notice period of 1 month with which the defendant was uncomfortable. It also included a 3 month post-employment restraint. After discussions with BIS management in relation to his concerns about the 1 month notice period (and apparently with no complaint about the post-employment restraint) a second draft employment agreement was provided to the defendant in March 2011. The March 2011 draft provided for 3 month's notice and a 6 month restraint clause. The defendant's affidavit evidence was that he did not recall noticing the change in the restraint from 3 months to 6 months. In cross-examination he said it "morphed" from 3 months to 6 months and he "either took no notice of it or didn't worry about it" (tr 160). 14On or around 1 April 2011 the defendant met with the Human Resources Director of BIS, Ms Bonnie Kestel. The conversation between the defendant and Ms Kestel was in the following terms: Defendant: Bonnie, the guys are not happy with the restraint. Lots of the other rats and mice we've sorted out, but the central issue is that people are by and large not happy with the restraint clause. The concern is, Bonnie, that our interpretation of the contract is that it precludes anyone from working in the industry with anybody that's deemed to be a competitor of BIS which is just about everybody. Ms Kestel: Tom, they're not going to change it. The clause is only in there to scare people not to do the wrong thing. As long as I've been with Bis, it's never been enforced. Defendant: What I know about these restraints of trade is that this would probably be unenforceable anyway. Kestel: I agree. Defendant: On the basis of what you've told me, I will sign the contract. I will speak to the others who have concerns and pass on your comments and encourage them to sign. 15The defendant signed the employment contract without further amendment and, by letter dated March 2011, BIS confirmed his appointment as "General Manager - WA", located in Perth. The defendant's employment under the contract of employment commenced on 16 March 2011. However his continuity of service was calculated from 2 June 2008 (the date of commencement of his employment with Gulf) (cl 2.2). Either party could terminate the employment contract by giving three months notice (cl 10.1(a)). BIS was able to terminate the employment contract by either giving the defendant three months notice or paying him an amount equal to 3 months annual base salary in lieu of notice or a combination of both (cl 10.1(b)). 16The employment contract also included the following: 8. CONFIDENTIAL INFORMATION 8.1 The Employee must, both during and after their employment, with the Company; (a) keep the Confidential Information confidential; (b) take all reasonable precautions to protect the Confidential Information; (c) not divulge the Confidential Information to any third party; (d) not make use of the Confidential Information, except to the extent that is reasonably required to carry out the duties of the position and as agreed by the Company; (e) not copy, reproduce or reverse engineer, or attempt to derive the composition or underlying information of any such Confidential Information; and (f) limit the use of, and access to, the Confidential Information to those employees of the Company who need to know such information for the purposes of carrying out their duties. The Employee in such circumstances would use their best endeavour to ensure that such employees will keep the information confidential. 8.2 The Employee must immediately notify the Company of any suspected or actual unauthorised use, copying or disclosure of Confidential Information. 8.3 The Employee must provide assistance recently requested by the Company in relation to any proceedings the Company may take against any person for an authorised use, copying or disclosure of the Confidential Information. 17Clause 1 of the employment contract included the following definition: 'Confidential Information' means information in any medium (whether oral, written, stored electronically or magnetically or otherwise) including, but not limited to: (a) confidential and financial information concerning the Group (including, but not limited to, trade practices, pricing policies and customer lists); (b) information either directly or [in]directly related to customers or clients, suppliers, terms of trade, pricing lists or pricing structures, marketing information and plans; (c) Intellectual Property, Inventions, business plans and dealings, technical data, information about employees or officers, financial information and plans, designs, formulae, product lines, research activities; (d) trade secrets of the Group; (e) confidential know-how of the Group; (f) the terms of this agreement; (g) information concerning the business, finances or customers of the third-party which the Company or any Group Company has an obligation not to disclose; (h) any document marked confidential and any information the employee has been told is confidential or which the employee might reasonably expect that the Company or a Group Company would regard as confidential; (i) any information that has been given to the Company or a Group Company in confidence by customers, clients, suppliers or other persons; (j) computer programs, codes, algorithms, know how, processes, strategy information, forecasts and software and the source codes of any software, of which the Employee becomes aware or generates (both before and after the day this agreement is signed) in the course of, or in connection with, the Employee's employment with the Company but does not include information which is generally available in the public domain. 'Group' is defined as the Company, BIS Industries Limited and each of it's Related Bodies Corporate and partnerships and any other entity controlled by any one or more of any such entity, each a "Group Company'. ... 'Related Body Corporate' is defined as having the meaning given to it under the Corporations Act 2001 (more than one Related Body Corporate being 'Related Bodies Corporate'). 18The employment contract also included the following: 14. RESTRAINT OF THE EMPLOYEES CONDUCT 14.1 Definitions In this clause, (a) the 'Restricted Period' means the period of the Employee's employment and the six [6] months following the termination of this Agreement; (b) the 'Restricted Territory' means all States and Territories in which the Company conducts business. (c) the 'Restricted Business' means any business that is the same as or similar to the business of the Company or any material part of it; or competes with the business of the Company or any material part of it. 14.2 Non-competition undertaking (a) the Employee must not (either personally or through any other entity) undertake, be employed or engaged in, provide services to, or be otherwise involved or interested in any Restricted Business in the Restricted Territory during the Restricted Period. (b) Nothing in this clause 14 prevents the Employee from being a shareholder in a company whose shares are quoted on the Australian Stock Exchange Limited and of which the Employee hold less than 5% of the issued capital even though the company is engaged in the Restricted Business. 14.3 Non-solicitation undertaking (a) During the Restricted Period, the Employee must not (either directly or through any other person) and whether on their own account or for any other person: (i) solicit, or endeavour to solicit, the business, custom or services of any business who was a customer or supplier of the Company or the Group (including any business in the process of being engaged as such a customer or supplier) and whom the Employee had dealings with during the period of 12 months immediately prior to the cessation of the Employee's employment; or (ii) entice away or endeavour to entice away from the Company or the Group any employee, contractor or agent of the Company or the Group or anyone who was at any time during the period of 12 months immediately prior to the cessation of the Employee's employment an employee or contractor of the Company or the Group and with whom the Employee had dealings the period of 12 months immediately prior to the cessation of the Employee's employment. 14.4 Severability If clauses 14.2 and 14.3 are judged to go beyond what is reasonable in the circumstances and necessary to protect the legitimate interests of the Company or the Group but would be judged reasonable and necessary if any activity or any part of the Restricted Business, Non-Compete Period, Non-Solicitation Period or Restricted Territory were deleted or reduced, then clauses 14.2 and/or 14.3 (as applicable) apply with that part deleted or reduced by the minimum amount necessary to make clauses 14.2 or 14.3 (as applicable) reasonable in the circumstances. 14.5 Acknowledgement The Employee acknowledges that: (a) the restrictions in this clause 14 are reasonable in the circumstances and necessary to protect the business interests and goodwill of the Company; (b) damages may not be a sufficient remedy for the Company for any breach of this clause 14 and the Company is entitled to specific performance or injunctive relief (as appropriate) as a remedy for any breach or threatened breach by the Employee, in addition to any other remedies available to the Company at law or in equity; and (c) this Employment Agreement is governed by the laws of New South Wales and the enforceability of this clause 14 will be determined in accordance with the Restraints of Trade Act (NSW) 1976. 19In July 2011 the defendant was promoted and appointed as Executive General Manager - Assets effective from 1 August 2011. The defendant's duties in the new role included improving the methods, systems and compliance for the maintenance and service of vehicles. This included improving systems so that there was a more predictable maintenance spend and a reduction in vehicle breakdowns. It involved the defendant meeting with area managers, conducting fortnightly telephone conferences with regional maintenance managers, making numerous site visits to gauge the level of maintenance performance and developing strategies for improvement. It was in this new role that the defendant became a member of the Operational Execution Team (the OET). 20Mr Elmer had a further conversation with the defendant in April or May 2012 to see how he was going and whether it was still "ok" if he followed him up around 30 June 2012. The defendant advised Mr Elmer that he would be grateful if he would call him at that time because he was not sure whether he would fit into the BIS organisation after 30 June 2012 or whether the former owner of Gulf was "staying or going". 21On 8 June 2012 Mr Elmer made further contact with the defendant to set up a meeting to discuss his possible employment with TOLL. Those meetings took place in Perth in mid June and early July 2012. The defendant signed a contract of employment with TOLL (in fact a subsidiary, Toll North, about which no point is taken) and tendered his resignation to BIS on 31 July 2012 giving three months notice expiring 31 October 2012. The defendant left his office that day leaving his laptop, fuel card, taxi card and keys to the premises. 22By letter to the defendant dated 31 July 2012 (hand delivered by Mr Briant, Director, People and Organisation of BIS, that evening), BIS advised that during the notice period, the defendant was to perform project work as directed by Mr Briant. At that time, the defendant had a conversation with Mr Briant about whether he would be placed on "gardening leave". Mr Briant advised the defendant that there was a "distinct possibility" that he would do "project work during the notice period or work from home". Two or three weeks later, the defendant was telephoned by BIS and was asked to attend its premises to assist with the stocktake of parts believed to be obsolete. The defendant arranged for two employees (one from the workshop and one from the store) to personally count the parts. The defendant then provided the stocktake information to an officer of BIS. It is not clear on what date that stocktake was completed. However it is clear that although the defendant claimed he was on "gardening leave" he did some work during that period. 23In letter to the defendant dated 31 July 2012, BIS claimed that during his employment he had been provided with access to "confidential and commercially sensitive information". It was alleged that this information included "proprietary material concerning logistics interface methods and optimising performance of dual-power prime-movers, and knowledge of BIS Industries' confidential pricing models and strategic initiatives". Validity of Restraint 24The two pre-requisites to a valid restraint are that it must afford no more than adequate protection to the party in whose favour it is imposed; and it must be in no way injurious to the public: Nordenfelt v Maxim Nordenfelt Guns & Ammunition Co Ltd [1894] AC 535. In deciding whether a restraint secures no more than adequate protection, it is necessary to decide what it is for which protection is required and what it is against which protection is required: Herbert Morris Ltd v Saxelby [1916] 1 AC 688 at 708 per Lord Parker. 25BIS contended that the confidential information to which the defendant had access is that for which protection is required. BIS also contended that the prospect of a competitor (in this instance TOLL) obtaining and using its confidential information from its former employee to gain an unfair commercial advantage over it, is that against which protection is required. Confidential Information 26The confidential information as defined in clause 1 of the contract of employment included information directly or indirectly relating to customers or clients. BIS claimed that this would include the contracts BIS had with those clients, how those contracts were performing, the termination dates (including penalty provisions for early termination) of those contracts and the pricing structure within those contracts (the contract information). BIS also claimed that as a member of the OET, the defendant had access to the contract information. 27There was a claim by BIS that the maintenance standards for DPRTs developed by BIS were also appropriately characterised as confidential information. It would appear that BIS prides itself on its capacity to maintain its DPRTs so that they operate efficiently in the extremely harsh and remote desert conditions. Mr Rogers, the Finance Director of BIS, gave affidavit evidence that the defendant was promoted to facilitate the introduction of the Gulf maintenance and operational expertise and to ensure consistency across BIS' asset management business. Mr Rogers also gave evidence that the BIS maintenance standards are not published and that the only people who have access to them are the current BIS employees. 28The maintenance of these very large vehicles is essential to the profitable operation of the business. It is obvious that there could be an adverse financial impact on the business if they are out of service for any length of time. Prior to the acquisition of Gulf, BIS outsourced the maintenance of the DPRTs to third parties. When BIS acquired Gulf it also took over its in-house maintenance program and know-how in this field. This enhanced BIS' maintenance programs for the DPRTs. The warranties on the DPRTs include a requirement to comply with maintenance schedules provided by the manufacturer, Powertrans (Ex (D1)5). If there are procedures unique to and developed by BIS (and Gulf) that enable BIS to keep its DPRTs in service for longer periods than its competitors, then this would probably be an aspect of its "confidential know-how" for which protection may be appropriate. There may well be aspects of this know-how to which the defendant had access. However, having regard to the fact that up until the acquisition of Gulf in December 2010 these vehicles were maintained by third parties apparently without any requirements of confidentiality undertakings, it appeared very difficult for BIS to maintain this aspect of its claim in relation to the maintenance standards. 29Mr Newlinds (sensibly in my view) limited the claim in this regard to the contract information (tr 5; 219). If that is a misunderstanding of the submissions then, having regard to what I have said above, I would not regard the evidence as supporting a claim in respect of the maintenance standards of the DPRTs being confidential information. 30Some of the claims made in BIS' letter to the defendant dated 31 July 2012, referred to above in respect of the nature of the confidential information to which the defendant allegedly had access, were also not pressed. This is not surprising having regard to the evidence given by Mr Rogers (who took part in the decision to write the letter) that he did not know to what the expression "proprietary material concerning logistics interface methods" referred (tr 64). Mr Rogers also agreed that after mid 2011, the defendant did not have access to (or the knowledge of) the "pricing models" referred to in the letter of 31 July 2012 (tr 69-70). 31Evidence was called by TOLL in an attempt to prove that part of the contract information was not confidential, in particular, the termination dates of BIS' contracts. That evidence was tendered for the purpose of demonstrating that the termination dates of BIS' contracts with various mines are in the public domain. In this regard TOLL relied upon the evidence of Russell Baxter, the National Fleet and Operations Development Manager for Toll Mining Services, who was previously employed by BIS for four years, from 2004 to 2007. Mr Baxter gave affidavit evidence that he, and therefore TOLL, were aware "in a general sense" of duration and expiry dates of contracts because TOLL had unsuccessfully tendered for many of the contracts for the various mines and because it maintains close relations with the mine site operators. In paragraph 15 of his affidavit, Mr Baxter identified eleven mine sites and mine site operators in this regard (including Polaris, Newmont, Christmas Creek and Cloudbreak, Granny Smith and Murrin Murrin). However, in cross-examination, he gave the following evidence (tr 151-153): Q. In any event, in relation to Polaris, you say that you believe that there is some sort of long-term contract in place? A. A term of contract. Q. And when does it finish, do you believe? A. I don't know. Q. You don't have the faintest idea, do you? A. Based on my experience we normally priced these jobs for minimum three-year contract. Q. So, the best you can do is it is for a minimum of three years? A. Yes. Q. What about Newmont, any idea? A. Newmont is a contract that the Gulf group had held for a very long time. Q. I just asked you when you think it expires? A. I don't know. Q. No idea? A. No idea. Q. In relation to Christmas Creek you said there were three of them and you had a theory as to when one of them expires? A. The other one that Bulkhaul had when we did do the due diligence finishes in 2014. There is another one there but I'm not sure of which is I believe is a joint-venture. Q. Cloudbreak you think expires in 2013, is that right? A. Yes Q. You got that from what you saw of the due diligence of the Gulf purchase? A. Yes. Q. Of course it might have been varied in the meantime, may it not? A. Yes. Q. Any idea what is going on at Granny Smith? A. Granny Smith was end of the contract of due diligence, so it may have been renegotiated at the business acquisition. Q. You have got no idea have you? A. No. Q. And Murrin Murrin? A. Murrin Murrin was a complex contract in that it had a lot of additional services with crushing and screening and other, so I am not sure when this expires. Q. In any event, part of your job is to have to make a judgment as best you can as to when you expect contracts might expire? A. No Q. On particular projects? Not part of your job? A. No. I am National Fleet and Operations Development now. Q. In relation to the various contracts that are set out in paragraph 15 of your affidavit, do you have any idea what price was struck between the contractor and the mine? A. Where we were not awarded the contract I would assume that it was under our price. Q. That's the best you can do, isn't it? A. Yep. Q. All of these contracts inevitably have a provision that allows for termination by either side prior to the expiration of the term, that's right, isn't it? A. With penalties. Q. And the terms of those penalties varies from contracts to contract? A. Yes. Q. Got any idea of the termination provisions in relation to any of these contracts, have you? A. Yes. Q. Is that because the ones you saw when the tender took place? A. No, because Toll are at BCI. Q. Apart from the one where Toll was at, you don't know anything about the others, do you? A. No. Q. All of those things it would be very valuable for Toll to know because at some stage in the future you would expect that Toll would be competing directly with Bis for all of these contracts? A. Not all. Q. Most? A. That would be a judgment call at the time. 32Mr Baxter's evidence in cross-examination supports the contention, quite the opposite to his affidavit evidence, that the duration and expiry dates of these contracts are not known or in the public domain. 33Part of the contract information that BIS submitted the restraint protects is pricing. It was submitted that the nature of this information would be extremely valuable to a competitor and would enable a competitor to undercut BIS on price. In this regard the defendant relied upon a confidential exhibit that contained extracts from a Contract for Provision of Bulk Haulage Services (Ex (D2)7 (Confidential)). Those extracts include clauses relating to pricing with various, apparently complicated, formulae. It was submitted that having regard to these formulae, pricing is not a straightforward matter and an employee who had access to such formulae would probably not be able to assist a new employer by providing pricing information. I am not satisfied that simply because there are various steps in the process of adjusting price according to a particular formula (which may be complicated) an employee would not be able to assist a new employer to know at what price to pitch its services to a prospective client. This would be particularly so in the case of an employee who had been working in the industry for some years, as had the defendant. 34BIS submitted that knowledge of early termination provisions could inform a competitor of the price at which a customer can get out of a contract and knowledge of maturity dates could inform a competitor when it might approach a customer with a prospect of obtaining its business. It was submitted that the sensitivity with which this contract information is treated within BIS is evident from the fact that each contract has stringent confidentiality provisions and BIS takes strict measures to keep the contracts secure. 35Mr Joseph Thomas, a Director of BIS for NSW and Queensland, gave affidavit evidence of the topics that were discussed at the OET meetings (held once or twice per quarter) that the defendant attended. Those topics included (par 10): (a) the financial performance of different sites, including profitability and the variance between actual and budgeted EBITDA; (b) the operational terms of contracts such as the nature of the services offered under the contracts and pricing; (c) the terms and conditions of the contracts, and their effect on operations; (d) the profitable and non-profitable aspects of the contracts for certain sites; (e) relationships with customers, including areas of concern; (f) "re-deployable assets", including how assets that are not being utilised can be redeployed at other sites or in connection with new business opportunities; (g) the operation and maintenance of assets and equipment, including DPRTs, such as maintenance performance and scorecards, and strategies; (h) human resources at different sites, including budgeting issues, workplace health and safety, an employee turnover at different sites; 36The defendant's evidence was that the OET was set up principally to review the operations of underperforming jobs and to incorporate ways of improving performance. He recalled attending only about six OET meetings. The defendant accepted that "financial information" was provided and discussed at these meetings. However he claimed that he had no recollection of that information. He claimed that his "interest" during the OET meetings was the manner in which equipment management or mismanagement may have contributed to any problems and to see how improvements could be made. It was not suggested to Mr Thomas in cross-examination that the list of topics discussed at the OET meeting that he had described was inaccurate (tr 82-87). I accept that the defendant had access to the information described by Mr Thomas. 37In cross-examination the defendant attempted to reject the proposition that information about termination provisions of contracts would be valuable information to a competitor (tr 165). The defendant said that he had heard "this a lot in the industry that it is to great value knowing the termination and timing of a contract". He said that such information is advertised widely when clients call for tenders for the new contract term (tr 165). He accepted that the position might be different when a contract is renewed directly with a contractor, rather than through tender, and gave the following further evidence in cross-examination (tr 165-166): Q. Let us deal though with the termination provisions because it is always built into these contracts that either side can terminate before the term of the contract but with payment of a price; yes? A. That's certainly in some contracts, yes. Q. And when it is in some contracts, the fact that it is in the contract and the cost of an early termination would be extremely valuable for a competitor to know, correct? A. Possibly, yes. Q. Because if you combine that with knowledge of the price, then the competitor could go to the customer and pitch an offer at a lower price building in the cost of the customer doing an early termination of the contract, right? A. Yeah, assuming that a lower price was appropriate, yes. Q. And of course another piece of information about the contracts that you were privy to was how Bis was performing the contracts; you accept that, don't you? A. Mmm. Q. Because at these OET meetings -- A. We talked about that. Q. -- that is what basically you were talking about? A. Correct. Q. How the contracts were being performed on a site by site basis? A. Correct, yes. Q. Which bits of the contracts were being performed well and perhaps where the problems were? A. Yes. Q. Now, that sort of information you would accept, that is as to specific performance of particular contracts, would be highly valuable to a competitor, wouldn't it? A. If - yes, if we would have been talking about good performing contracts, but we weren't. We were always talking about poor performing contracts. Q. But if the competitor knows these are the poor performing contracts, that is the very thing that gives them the advantage. They can go to the customer and say, "Listen, we know you are not very happy with how Bis is performing the contract so how about you give us a go?"; you can see that, can't you? A. Yeah, I can see that. Q. It is obvious, isn't it? A. Yes. 38I am satisfied that the contract information was Confidential Information and was that for which protection was reasonably required. I am also satisfied that the prospect of a competitor gaining access to the confidential information was that against which protection was reasonably required. Is the restraint reasonable? 39BIS contended that in the circumstances of this case, the restraint of 6 months in clause 14 of the contract of employment is reasonable in the interests of the parties and affords no more than adequate protection to it. It also contended that such a restraint is in no way injurious to the public. 40The defendant submitted that BIS failed to call evidence that at the time the parties agreed to the restraint it had identified the interests it sought to protect; that the interests were legitimate for it to protect; or that it attempted to draft a restraint to be no broader than reasonably necessary to protect its legitimate interests (par 26; Written Submissions (WS)). In reliance upon Jones v Dunkel (1959) 101 CLR 298, the defendant submitted that it should be inferred from this "unexplained failure" to call such evidence that BIS did not impose the restraint on the defendant to protect any legitimate interest (par 28; WS). It is true that there was no evidence from any BIS officer or employee that, at the time the restraint was drafted, consideration was given to the nature of the confidential information to which the defendant would have access or to the need to protect the business operations and goodwill of BIS. However BIS called evidence in relation to the nature of the topics discussed at the OET meetings in respect of which it makes a claim that the defendant had access to confidential information that was highly valuable to a competitor. Indeed, as I have already said, Mr Thomas' evidence in relation to these topics was not challenged. Furthermore, the cross-examination of Mr Baxter and the defendant (referred to above) also establish these matters. In addition, the defendant tendered evidence (the Schedule in Ex (D2)6) referred to below) upon which BIS relied to submit that it can be inferred that BIS took great care in drafting a restraint that was reasonable. 41The defendant also submitted that when the second draft of the contract of employment was provided to him in March 2011, the restraint period increased from 3 months to 6 months with a notice period increasing from 1 month to 3 months. It was submitted that this change indicated that BIS simply calculated the restraint period by reference to the notice period and not by reference to any subject matter the law recognises may be legitimately protected by a restraint (par 31; WS). The fact that the change was made to the restraint period in the draft contract does not mean that it was calculated by reference only to the notice period. Rather the Schedule in Ex (D2)6 includes two other employees who have restraints of 6 months. One has a notice period of 1 month and the other has a notice period of 3 months. That does not support the proposition that there was a calculation automatically linked to the notice period. 42The defendant also relied upon his conversation with Ms Kestel to submit that the restraint clause was inserted to deter employees from going to competitors in circumstances where BIS did not believe that the restraint was enforceable and did not believe the restraint protected any legitimate interest. It was submitted that when this conversation is viewed within the circumstances of the defendant's resignation from BIS, it is reasonable to conclude that BIS imposed the restraint simply to prevent competition. In this regard the defendant relied upon an internal email in which the expression "traitor" was used (par 34; WS). Mr Rogers accepted in cross-examination that the expression was used in the context of the defendant's employment with TOLL (tr 71). However this was in the context also of the consideration of the Confidentiality Deed and the view as expressed by Mr Rogers, that "the approach" (to the defendant by TOLL) should not have been made (tr 71). I am not satisfied that the conversation with Ms Kestel and/or the email establish that BIS did not believe that the restraint in the employment contract was not to protect a legitimate interest. 43The time at which the restraint is to be assessed is at 1 August 2011, when the defendant was appointed as Executive General Manager. The defendant relies on the fact that the restraint was in place before he was promoted and at a time when the parties would not have contemplated that he would have had had access to the contract information to submit that the restraint was clearly unreasonable. Mr Newlinds accepted that there is force in the argument that between March 2011 and July 2011 the restraint may have been unreasonable. However it was submitted that once the defendant had access to the contract information in the OET meetings from 1 August 2011, the argument loses its force. I agree with that submission. 44At the time employment with BIS was offered to the defendant in February 2011 he had just refused an offer of employment from TOLL in January 2011 for an equivalent amount of salary and without a non-compete clause. The defendant accepted that at the time the BIS contract of employment was signed it was "highly likely" that the TOLL job would still have been available to him if he wanted it (tr 159). BIS submitted that in those circumstances the defendant had complete freedom not to sign the contract of employment with BIS. Indeed the defendant accepted that he "absolutely" had that freedom (tr 160). 45BIS also submitted that the defendant accepted the restraint with no illusion as to the possibility it would be enforced. Although his affidavit evidence recounted the conversation with Ms Kestel, referred to above, he accepted in cross-examination that he was never informed that the restraint would not be enforced. It was submitted that the defendant also knew that if BIS chose to enforce the restraint it would be a matter for the Court to decide whether it could do so (tr 162). The defendant accepted that he simply took a risk that the restraint would not be enforced (tr 163). 46In the Schedule (Ex (D2)6) recording the notice periods and post employment restraint provisions for twenty-six BIS employees (not including the defendant) two employees (Mr Wisniewski and Mr Lines) have 6 month restraint periods. Mr Wisniewski's notice period is 3 months and Mr Lines' notice period is 1 month. The other 24 employees (including Mr Chard) listed in the Schedule have a 1 month notice period and a 3 month restraint period. BIS submitted that the fact that there were different restraints for different categories of employees, formerly employed by Gulf and subsequently employed by BIS, demonstrates that deliberate care was taken to craft an appropriate period of time in the defendant's case. 47BIS emphasised that the defendant acknowledged in clause 14.5(a) that the restraint was "reasonable". It was submitted that in those circumstances the parties turned their minds to the reasonableness of the restriction in the circumstances that existed at the time that the contract was made. Those circumstances included the defendant's knowledge that he was going to be approached by TOLL in around June 2012 for the purpose of TOLL trying to secure his employment. The defendant commenced employment with BIS with an assurance by Mr Elmer that he would follow him up in June 2012. Notwithstanding that knowledge, the defendant signed a contract in which he agreed that the restrictions in clause 14 were not only "reasonable in the circumstances" but also "necessary to protect the business interests and goodwill" of BIS. This clause is not of shallow technical content. It was a formal recognition that BIS was not asking too much to protect itself and was behaving reasonably in seeking that restraint. 48Off road haulage in DPRTs is a competitive business with two major players (BIS and TOLL) vying for work in the market, in particular in Western Australia (although not limited thereto). When individuals and/or corporations invest in business operations, they usually do so for the purpose of making profits. As a matter of commercial commonsense, business organisations, whether they are large organisations such as BIS, servicing multi-million-dollar contracts with multi-million-dollar capital investment in their operations, or smaller scale operations, depend upon the loyalty of the workforce to assist them in achieving profits. 49The question is whether it is reasonable for BIS to protect its operations by placing restrictions on its employees taking its confidential information to its competitors and providing them with an advantage in the marketplace that they could not obtain otherwise. I am of the view that the answer to that question is in the affirmative. The question is whether the restriction in clause 14 of the contract affords no more than adequate protection to BIS. Clause 8 of the contract prevents the defendant from divulging the confidential information to any third party. The possibility of inadvertent disclosure was highlighted in this case during the evidence of the defendant in which he did not accept that some of the contract information is confidential information. Mr Newlinds obtained concessions that some of this information would be valuable to a competitor. Indeed the defendant ultimately accepted that it was "obvious" (tr 166). 50The defendant was an integral part of the OET and a person upon whom BIS relied for candid and confidential guidance as to how to improve its DPRT operations. For that purpose he was given access to confidential information that BIS is entitled to protect from becoming part of the armoury of its competitors. This is to be viewed in circumstances where TOLL has admitted that it has a seven-year plan to build up its market share. The only realistic way that its market share can presently build is by it taking part of (or more) of the market that BIS currently holds. 51The fact that the defendant had a conversation with Ms Kestel is not relied upon to suggest that BIS represented to the defendant that it would not exercise or insist upon its existing legal rights. Rather, the use of that conversation was limited to the proposition (that I have rejected) that BIS did not believe that the restraint was for the protection of a legitimate interest. 52There is no evidence of any clear timeframe within which BIS will be negotiating new contractual arrangements with the various mines that it services with its DPRTs. However the evidence suggests that one contract may be close to its conclusion and part of another contract may be renegotiated in 2014. It is obvious that the relationships between the various mines and BIS will have to be serviced in a manner that gives BIS its best opportunity to continue or renew the relationship. In that regard BIS has an advantage over TOLL of being in a current relationship with those mines and in a position to counter the loss of the defendant from its employment. It also knows that the defendant has had access to the contract information and it will need to adjust its strategies as best it can, to take account of that matter. 53BIS submitted that the defendant's acknowledgment of reasonableness is a most important factor in determining whether the restraint period was reasonable at the time it was entered into: Seven Network (Operations) Ltd v Warburton (No 2) [2011] NSWSC 386; (2011) 206 IR 450 at 471 [70]. BIS also submitted that the principle that contracts that are freely agreed are meant to be observed should be applied in this case: Seven Network (Operations) Ltd v Warburton (No 2) at 471 [71]. 54Although the defendant claimed to have no recollection of the financial information that he received in the OET meetings, some of that information may well come back to mind when he is working with TOLL and at a time when TOLL seeks to compete for contracts with the mines that are presently clients of BIS. The defendant's knowledge, as disclosed in his cross-examination, included discussions about contracts that were not performing well. Although the detail of this information was not pursued, it seemed to me clear that the defendant had a recollection that the contracts under discussion were not performing well. That information is valuable information that TOLL could use for the purposes of identifying those mines that may be more open to a change of contractor. 55At the time that the restraint was entered into when the defendant was promoted to Executive General Manager - Assets, with an entrée then into the OET meetings, it was envisaged that the contract information would be made available to him. Of course he may well have been able to glean from his site visits and discussions with regional managers and other managers in his former position some aspects of the performance of the contracts. However once he was privy to the sensitive commercial information in a market in which TOLL is seeking to take part or all of BIS' market share, it was not unreasonable to impose a restriction on the defendant's post-employment freedom. In this regard BIS relied upon the following passage of Brereton J's judgment in Cactus Imaging Pty Limited v Peters [2006] NSWSC 717; (2006) 71 NSWLR 9 at 14-15 [13]: As Lord Denning MR said in Littlewoods Organisation Ltd v Harris [1977] 1 WLR 1472 at 1479, [1978] 1 All ER 1026 at 1033, experience has shown that it is unsatisfactory simply to have a covenant against disclosing confidential information, because it is difficult to draw the line between information which is confidential and information which is not, and very difficult to prove a breach when the information is of such a character that an employee can carry it away in his or her head, so that the only practicable solution is to take a covenant from the employee by which he or she undertakes not to work for a trade rival. The permissibility of such restraints for that purpose is well established: Kone Elevators Pty Ltd v McNay (1997) ATPR 41-564 (43,830) at 43,834; Aust Contracts Reports 90-080 (90,592) at 90,595; Woolworths Ltd v Olson (at [38], [67]); Lindner v Murdock's Garage (at 650) (Fullager J); Portal Software Pty Limited v Bodsworth [2005] NSWSC 1179 at [83]. 56BIS had some difficulty in finally settling upon what it was that required protection. The broad claims in its letter directed to the defendant of 31 July 2012, with somewhat meaningless descriptions of confidential information, was most unimpressive. Its attempts to suggest that some aspects of the maintenance standards and/or processes fell short of what might be expected in identifying with specificity and clarity what needed to be protected. Ultimately the claim was limited to the contract information. I am satisfied that this was a legitimate interest to be protected by a reasonable restraint. 57The defendant submitted that the restraint is unreasonably wide to protect BIS' legitimate interest. In particular it was submitted that the defendant is restrained from being employed or engaged anywhere in Australia in circumstances where he only operated in Western Australia. It was also submitted that the "services" the defendant is prevented from supplying extend beyond the services he has expertise and experience in supplying. TOLL submitted that the 6 months post-employment period is wholly unreasonable particularly when account is taken of the decision to place the defendant on "gardening leave" for the balance of the 3 months notice period. It was submitted that the practical effect of the combination of the 3 months notice period and the 6 months restraint is out of all proportion to the interest to be protected. 58In Portal Software v Bodsworth [2005] NSWSC 1179, Brereton J dealt with the question of whether there was an intention that the employee's contract was terminated by payment in lieu or whether the contract remained on foot until the expiration of the notice period. His Honour found that it remained on foot until the end of the notice period because there was no payment in lieu of notice but rather salary was paid in the ordinary course until the termination date: [99]-[100]. In Tullett Prebon (Australia) Pty Limited v Simon Purcell [2008] NSWSC 852, Brereton J dealt with the question of whether an employer of an employee effectively on "gardening leave" and no longer rendering services to the employer, was entitled to enforce contractual restraints that prohibited the employee from working for a competitor during the remainder of the contractual term. His Honour expressed the view that although no restraint is involved in the employee not being provided with work, a restraint is involved in precluding the employee from seeking work elsewhere: [55]. 59In the present case, the defendant was not satisfied with the notice period of 1 month in the February 2011 draft contract. He was able to negotiate what he thought was a better arrangement in the 3 months notice period. Although the defendant said that he either did not notice the 6 months restraint or he did not worry about it (tr 160), I am satisfied that when he negotiated the 3 months notice period it was more likely that he did not worry about the 6 months restraint period. That seems to me to be consistent with the care that he took to negotiate a better deal by having BIS agree to an extension of the notice period. The conversation with Ms Kestel was about the restraint periods for "the guys". 60Although the defendant was on "gardening leave", it is clear that he performed some work (the stocktake) for BIS during the notice period. It would appear that he understood that his employer who was paying his salary was entitled to call on him during the notice period. It would have been a different matter had BIS given him 3 months payment in lieu of notice. However in this instance it was the defendant who gave the notice. I do not regard the period of notice during which the defendant was employed as a provision in restraint of trade. 61The question of whether a restraint is reasonable is to be assessed at the time the contract is made and not by reference to conduct at the time of termination of the contract. Some employers may utilise the termination option of payment in lieu, whilst others may utilise the termination option of having the employee work during the notice period. Such conduct may have some relevance in considering whether to grant an injunction. 62In his analysis of public policy in The Restraint of Trade Doctrine (LexisNexis Butterworths, 3rd ed., 2008), Justice JD Heydon refers to the importance of maintaining faith in the enforceability of promises (pp 26, 274). I am, however, satisfied that the restraint imposed on the defendant was too wide. It prevented the defendant from taking up employment anywhere in Australia in a wide range of employment opportunities beyond the business of DPRT services. I am satisfied that the restraint should be severed as envisaged in clause 14.4 of the contract of employment, to ensure that the protection is no more than adequate protection of the legitimate interest of BIS. I am satisfied that the restraint period of 6 months is not unreasonable. However it should be restricted to the defendant taking up employment in a business that is in competition with BIS in the provision of DPRT services. Discretion 63The defendant contends that the restraint should not be enforced because it cannot be inferred that the defendant will misuse any confidential information to which he had access. The defendant's initial resistance to the propositions put by Mr Newlinds in cross-examination about the use a competitor could make of the contract information and his ultimate acceptance that it would be of value to a competitor, is a factor to be taken into account in the exercise of discretion not to enforce the restraint clause. The initial unwillingness to accept the proposition suggests a need to protect against disclosure. BIS also submitted that no evidence of hardship or other reason for declining to grant the injunction has been proffered by the defendant. For instance the defendant has not attempted to show that, were the injunction to be granted, he would be left without the means to gain work. It was submitted that quite to the contrary, the defendant's affidavit suggests that he has a wealth of experience that would equip him for employment that does not involve DPRT contracts. Conclusion 64I intend to make an order that the defendant be restrained until 30 April 2013, either personally or otherwise from undertaking, being employed or engaged in, providing services to, or otherwise being involved in the business of TOLL and its associated entities that provide DPRT services. Having regard to the urgency with which the matter was listed for final hearing, the defendant requested that if injunctive relief is to be granted he be permitted to call additional evidence in respect of possible hardship. Should the defendant wish to make application to call evidence in support of any application to vary the injunction, I will deal with that application when the matter is listed on 4 December 2012 for the purposes of filing Short Minutes of Order reflecting these findings. CONFIDENTIALITY DEED 65In early 2012 TOLL was considering an equity investment in or purchase of the shares or assets of BIS. On 24 May 2012 BIS, as "Discloser", and TOLL, as "Recipient", entered into the Confidentiality Deed that includes the following: Background A The Disclose has, at the Recipient's request, agreed to disclose on its own behalf and as agent for the Group Entities the Confidential Information to the Recipient for the Approved Purpose. B. The Recipient has agreed that the Confidential Information will be provided to it on the terms of this deed and that it will not use or disclose the Confidential Information except as set out in this deed. 66The "Approved Purpose" is defined as the "exclusive purpose of the Recipient considering, evaluating, documenting and/or implementing the Potential Transaction". The "Potential Transaction" is defined as "a potential equity investment in the Discloser or its Controlled Entities and/or a potential sale of the shares or assets of the Discloser or its Controlled Entities". "Controlled Entities" are defined as entities that are "either directly or indirectly majority owned or controlled by" BIS. The definition of "controlled" has the meaning given to it in s 50AA of the Corporations Act 2001 (Cth) (Sch 1; cl 1). The Deed also includes the following definition: Confidential Information means: (a) the nature and existence of this deed and the Potential Transaction; (b) the fact that the parties are working in connection with the Approved Purpose; (c) all information relating to: (i) the Discloser; or (ii) any of the Related Persons of the Discloser, disclosed to the Recipient or any of its Related Bodies Corporate or Affiliates by the Discloser or any of its Related Persons in connection with the Potential Transaction; (d) notes and other records prepared by or on behalf of the Recipient incorporating the information referred to in any of paragraphs (a) to (c); (e) all copies of the information and the notes or other records referred to in any of paragraphs (a) to (d); and (f) all information referred to in any of paragraphs (a) to (e) whether or not in material form and whether disclosed before or after the date of this deed, and which do not fall within any exceptions outlined in clause 4.2 of this deed. 67The Confidential Deed also includes the following: 2.1 Acknowledgement The Recipient, for its self and on behalf of each of its Related Persons, acknowledges and agrees that: (a) the Confidential Information is secret, highly confidential and commercially valuable to the Discloser and its Related Persons; (b) disclosure of Confidential Information in breach of this deed could cause substantial commercial and financial detriment to the Discloser and the Group Entities; and (c) the Confidential Information is disclosed to the Recipient on the terms set out in this deed. 2.2 Recipient must keep information confidential Except as permitted by this deed or with the prior written consent of the Discloser, the recipient must: (a) hold the Confidential Information in strict confidence and not disclose it or otherwise make it available to any person; and (b) not use any Confidential Information for any purpose other than that Approved Purpose and, in particular, must not use any Confidential Information for its own commercial purposes or to the current or potential competitive disadvantage of Discloser or any Related Person of the Discloser. ... 3 Recipient not to approach ... 3.2 Non-solicitation For a period of 18 months from the date of this deed, the Recipient must not, without the prior written consent of the Discloser, directly or indirectly, solicit the employment of, hire or engage for the provision of services, or cause or seek to cause to leave the employment or engagement of the Discloser or its Related Persons any employee or officer currently employed or engaged by the Discloser or its Related Persons, or attempt to entice any such person to leave their employment or engagement with the Discloser or its Related Persons, except that, the Recipient may offer employment to an employee who has responded to bona fide advertising or recruiting campaign which is targeted to a wide audience of potential application. ... 4 Exceptions ... 4.2 Information that is not confidential Subject to clause 4.3, the Recipient is not bound to keep confidential any Confidential Information if and to the extent that: (a) the information was in the Recipient's procession before the Discloser disclosed it to the Recipient; (b) the information is already or becomes available in the public domain other than because of a breach of this deed by the Recipient or any of its Related Persons; (c) after disclosure by the Discloser to the Recipient, the Recipient can demonstrate that the information was received in good faith by the Recipient from a person other than: (i) the Discloser; or (ii) persons the Recipient knew to be in breach of an obligation of confidence owed by the person to the Discloser; or (d) the information is developed independently by the Recipient and/or any of its Related Persons without the use of, all reference to, Confidential Information. ... 5 Recipient does not own the information The Recipient acknowledges that this deed does not: ... (b) oblige the Discloser to disclose or otherwise make available any Confidential Information to the Recipient or any of its Related Persons; ... (d) oblige the Discloser to participate in discussions or negotiate with the Recipient or its Related Persons to give effect to any Potential Transaction ... 7 Return of information ... 7.4 Obligations continue The obligations of confidentiality under this deed continue to apply to the Recipient and its Related Persons for the term of this Deed even if: (a) the Approved Purpose is completed or party determines not to pursue the Potential Transaction; and (b) the Recipient has returned, destroyed or deleted the Confidential Information in accordance with clause 7.1 (Return of information). ... 9 Breach and remedies for breach ... 9.3 Proceedings The Recipient acknowledges that damages alone is unlikely to be adequate to compensate the Discloser or its Related Persons that any breach by the Recipient of this deed (including a breach of any obligation to procure that the Recipient's Related Persons do or omit to do anything) and agrees, for itself and on behalf of each of its Related Persons, that without limiting the relief that the Discloser is entitled to seek, the Discloser may seek an injunction on its own behalf, or as trustee fit any of its Related Persons against the Recipient if the Recipient is in breach or threatens to breach, or if the Discloser reasonably believes that the Recipient will breach, this deed (including a breach of any obligation to procure that the Recipient's Related Persons do or omit to do any thing). 68As part of the due diligence process, BIS provided information to TOLL in documents that were marked as part of Confidential Exhibit A (Ex A) in the proceedings. Although there is an acknowledgment by TOLL in the Confidentiality Deed that all information relating to BIS disclosed to it in the process was "secret, highly confidential and commercially valuable", TOLL called evidence to establish that some of the information in respect of which BIS claimed confidentiality in the proceedings, was not confidential. 69The document in Tab 3 of Ex A is dated April 2012 and was provided to TOLL in April 2012 before the Confidentiality Deed was signed (tr 39). In his affidavits of 26 September 2012 and 17 October 2012, Mr Rogers claimed that the information materials behind Tab 3 disclosed "critical information". He also claimed that Tab 3 contained: information that would enable those in the industry to determine the maturity date of the contracts that BIS has with its clients; and "confidential information" about the revenue from BIS' major contracts and its exposure to fluctuations in commodity prices. 70There is nothing on the face of the document in Tab 3 to suggest that it is published with a restriction on further publication. Indeed in cross-examination Mr Rogers was shown an article in the Australian Financial Review of 15 May 2012 entitled "Teaser tactics: KKR puts BIS in the fast lane" (Ex (D1)2) (tr 40). That article includes the claim that the "teaser" was prepared "in-house" and sent out to BIS' rivals in the transport and logistics sectors. Mr Rogers accepted that the document referred to as the "teaser" was the document at Tab 3. He also accepted that at the time the document was provided to third parties, BIS did not require any confidentiality undertakings (tr 40). Mr Rogers then gave the following evidence in cross-examination (tr 41-42): Q. But what I am putting to you is that I understand - thank you for your answer - but what I put to you was that no such undertakings were obtained because the view was, or the understanding was by you that Bis did not think anything in the document was commercially sensitive or confidential? A. I wouldn't put it that way myself. I think that there is more or less confidential information and it is necessary to put some information out there in a teaser document in order to gauge interest. Q. But if you had really thought that it was confidential and commercially sensitive, you would have sought some sort of undertaking, wouldn't you? A. That's correct, yes. Q. So you didn't in fact think that it had that sort of commercial sensitivity or confidentiality? A. Not as much as the information in the other documents, no. Q. Well, it didn't have any at all, did it? A. I beg your pardon? Q. It didn't have any confidentiality or commercial sensitivity at all, did it? A. It did for me but we decided that it was - it was, as I said, less sensitive than the other information that was held back until after the confidentiality agreement was signed. Q. So a decision was taken somewhere within Bis not to seek any sort of undertakings in relation to the information in the tab 3 document? A. A decision was taken, yes. Q. And there was a perceived benefit for Bis in proceeding in that manner because you wanted to interest potential purchasers in the market? A. That's right, yes. Q. And the thinking was, wasn't it, that it was part of the price for attracting people that you wouldn't insist on confidentiality undertakings? A. For that document, that's right, yes. 71Having regard to this evidence, the document at Tab 3 could not be regarded as confidential. A decision was made by BIS to use it to lure potential purchasers and it has been published to third parties without any restriction as to use or republication. 72The materials in Tab 4 were provided to TOLL in May 2012 after the Confidentiality Deed was signed. The materials in Tab 5 were provided to TOLL at a presentation on 4 June 2012. The Corporate Development Manager of TOLL, Ms Kimberlea Gibson, gave affidavit evidence that she attended the presentation on 4 June 2012. Also present were the Chairman, the Chief Executive Officer and the Chief Financial Officer of BIS, the Chief Executive Officer and the Chief Financial Officer of Toll Global Resources, the Chief Financial Officer of the Toll Group, and the General Manager of Toll Mining Services (Mr Elmer). The documents in Tab 5 that were provided at the presentation are entitled "Information materials". They include the following: This presentation has been prepared on a confidential basis solely for the use of the Recipient. It is provided pursuant to and on terms of the confidentiality deed signed between the Recipient and Bis (Confidentiality Deed). This presentation must not be copied, reproduced, distributed or passed to any other person at any time, in whole or in part, other than in accordance with the Confidentiality Deed. 73Mr Rogers accepted that some of the historical information about revenue and profit in Tab 5 was publicly available (tr 55). The percentage of EBITDA growth over the previous five years was disclosed to TOLL and others in the Tab 3 documents. TOLL submitted that the revenue figures are available in the published accounts, in which the revenue figure for the year ending 2012 is even higher than that referred to in Tab 5. It was also submitted that EBITDA figures can be derived from the published accounts by adding back onto the profit figures, the figures that are there published for tax, interest, depreciation and amortisation. The estimated revenue and EBITDA for the year ending 2013 had already been provided to TOLL by Deutsche Bank in March 2012. Deutsche Bank had also provided TOLL with a break up of revenue percentages by sector of BIS' business. 74Mr Elmer accepted (though somewhat reluctantly) that at least some of the materials in Tabs 4 and/or 5 of Confidential Exhibit A (in the Information materials) that had been provided to TOLL would be "valuable to a competitor" (tr 138-139). I am satisfied that the documents in Tabs 4 and 5 are part of the Confidential Information that was provided to TOLL pursuant to the Confidentiality Deed and that this was material that TOLL acknowledged was "secret, highly confidential and commercially valuable" (cl 2.1(a)). 75Ms Gibson gave affidavit evidence that, after the presentation on 4 June 2012, she did not feel that TOLL's questions had been answered and she was "still unclear about the capital requirements" of BIS. There were further written questions by TOLL and answers by BIS and on 12 June 2012 "based on the information available" TOLL decided not to proceed with the acquisition (Ms Gibson 25/10/2012; paragraphs [32]-[33]). 76After the defendant tendered his resignation, BIS wrote to TOLL on 1 August 2012 suggesting that its employment of the defendant was "in clear breach" of clause 3.2 of the Confidentiality Deed. On 8 August 2012 the Managing Director of Toll Holdings Limited responded to BIS' letter of 1 August 2012 in terms that included the following: Firstly, please let me assure you that we take our compliance with contractual commitments seriously, and I can assure you (notwithstanding your assertion otherwise) that no breach of a Confidentiality Deed entered into on 24 May 2012 has occurred. We concur that under clause 3.2 of the Deed we agreed not to solicit the employment of an employee of Bis Industries Limited from 24 May 2012 until 24 November 2013. We do not however agree with the facts concerning Mr Freeman as portrayed in your letter. We have also taken seriously the obligation under clause 2.3 to limit the disclosure of the contents of the Deed to those personnel that needed to know. You may not be aware, that discussions first commenced with Mr Freeman in relation to his potential employment by Toll North in December 2010. 77After further correspondence between TOLL and BIS, TOLL wrote again on 7 September 2012 in terms that included the following: Unfortunately you have misunderstood the basis of my assertion that Toll has a differing legal view on the interpretation of the non-solicitation provision contained in clause 3.2 of the Deed. We maintain that Toll Holdings Limited is not in breach of clause 3.2 of the Deed. I was in fact making a separate observation that the normal intent behind obligations such as those set out in clause 3.2 is to protect a vendor against poaching following engagement between personnel during due diligence. As you know, in this instance, not only was the original employment offer made to Mr Freeman well ahead of the execution of the deed, but the due diligence investigations were terminated at a very early stage, with only one management presentation of one hour and limited engagement between financial personnel having occurred. At no point during this very limited due diligence was Mr Freeman in contact with any of our due diligence team. 78As can be seen from these extracts, TOLL's focus was on a denial that it had breached clause 3.2 of the Confidentiality Deed rather than any suggestion that the clause was unreasonable and unenforceable. 79The 18 month non-solicitation period in clause 3.2 was the subject of negotiation. It represented a compromise between a period of 24 months originally proposed by BIS, and periods of 6 months and 12 months proposed by TOLL. The provision in the clause excluding employment as a result of a bona fide advertising or recruitment campaign was also the subject of negotiation. BIS submitted that clauses of this kind are far from novel. Indeed TOLL accepted a 12 month non-solicitation clause when it conducted due diligence on Mitchell Corp, the entity from which it acquired its own DPRT business in 2011. Evidence was also given by Mr Stock from UBS that in his experience in both Australia and the United Kingdom non-solicitation clauses are common in a due diligence context (tr 96). 80BIS submitted that both parties were well advised by lawyers and investment bankers at the time they negotiated clause 3.2. Both are large organisations capable of insisting on contractual provisions necessary to protect their own commercial interests. It was submitted that what follows from this is that the Court can be confident that both parties considered that the provision was reasonable in the circumstances. I agree that in these circumstances the parties accepted that clause 3.2 was reasonable to protect BIS' interests and was not an unreasonable restriction on TOLL. 81BIS submitted that the non-solicitation clause served a sensible commercial purpose. TOLL is a commercial competitor with a 7 year plan to expand its DPRT market share. One way of achieving that expansion is to acquire BIS. The due diligence process enabled TOLL to decide whether it would expand its DPRT business by this mechanism. However it decided against the acquisition and now seeks to expand its DPRT business by taking BIS' share of the market away from it. One way of enhancing its chances of taking over BIS' market share would be to employ the people presently in a relationship with the target market, being BIS employees. It was submitted that clause 3.2 gave BIS a measure of protection against the risk that TOLL might use the Confidential Information to target particular employees, including employees in parts of the business that were shown to be performing well. That is so notwithstanding that TOLL was not provided with information about any particular employees. It is possible to identify areas of a business that may be worth pursuing from information other than specific employee information. If, for instance, one area of a business is performing extremely well it may be that its employees would be targeted. It was also submitted that the clause does not hamper TOLL's ability to recruit employees because of the provision allowing employment as a result of the advertising or recruiting campaign (the carve-out provision). 82It was submitted that these considerations strongly support upholding clause 3.2 in the terms in which it was negotiated. It was also submitted the general policy of the law, that people should honour their contracts, should be applied. 83TOLL relied on Kores Manufacturing Co Ltd v Kolok Manufacturing Co Ltd [1957] 3 All ER 158, a case in which the parties were engaged in the business of the manufacture of carbon papers and typewriter ribbons. This was a highly competitive market in which both companies and others operated independently. In 1934 the plaintiff decided to relocate its business to premises adjacent to the defendant's premises. The two managing directors held discussions and then agreed on an exchange of letters in which each agreed to refrain for 5 years from engaging any person who had been in the employ of the other. 84The agreement was invoked during the 1930s on two occasions. On the second of those the parties agreed that the agreement did not relate to consultants. During the Second World War the parties appear to have treated the agreement as suspended to facilitate the direction of labour to them by the Ministry of Labour. 85The agreement worked well until March 1957, when the plaintiff's chief chemist gave three months' notice and sought employment with the defendant. That led to litigation in which separate questions were identified for decision including whether the contract between the parties was void as being an unreasonable restraint of trade and contrary to public policy. Lloyd-Jacob J assumed that it was a reasonable provision in the interests of the parties that competition for employees should be avoided but concluded that it would appear that a five-year ban on a manual worker "was wholly unnecessary to secure it". His Lordship said at 162: For a man who relies on weekly employment for support, a denial of engagement in his own trade for six months would effectively drive him to some alternative occupation, and the same considerations would in all probability apply also to a woman worker. 86His Lordship noted the concession of the plaintiff's counsel that for highly skilled personnel, a period of twenty-one months would be effective to protect the plaintiff's legitimate interests. After referring to the approach the parties adopted during the War, his Lordship said at 163: But benevolence in operation, although it may mitigate the effect, cannot remove the evil of tyranny. Even if this court could import into this contract a limitation which the parties did not think it desirable to insert, namely, that written consent would invariably be given in all cases where the employee could not fairly be expected to continue his former employment, there would still remain a fetter on the freedom of the workman to offer his labour where he wished, and this a fetter which no interest of the employers necessarily required for their protection. 87On appeal (Kores Manufacturing Co Ltd v Kolok Manufacturing Co Ltd [1958] 2 All ER 65) the Court of Appeal (Jenkins, Romer and Ormerod L.JJ) considered the two questions; what it was for which protection was required, and what it was against which protection was required. Their Lordships said at 72-73: As to the first question, we take the answer to be that protection was required by both parties for (a) the adequacy and stability of their respective complements of employees; and (b) as we are prepared to assume, trade secrets and confidential information for which any of their respective employees might have become, or might thereafter become, possessed in the course of their employment. As to the second question, we take the answer to be that the dangers against which protection were required were (a) the unimpeded secession of employees of any grade from the employment of either of the parties to that of the other of them in the competing concern next door under the inducement of higher wages or better working conditions, or merely for the sake of change; and (b) the divulging to their new employer by employees so seceding of any trade secrets or confidential information of which they might have become possessed in the course of their employment with the other party. ... It is for the court to judge whether an agreement in restraint of trade is reasonable in the interests of the parties. We agree that where traders dealing on equal terms have become parties to (for example) a scheme for maintaining prices or for central selling, and there is nothing in its provisions which is obviously unreasonable in the interests of the parties, the court will be slow to set it aside at the instance of a party who has freely agreed to it. But the mere fact that parties dealing on equal terms have entered into an agreement subjecting themselves to restraints of trade does not preclude the court from holding the agreement bad where the restraints are clearly unreasonable in the interests of the parties. 88The Court of Appeal highlighted the fact that the five year "ban" was equally applicable to an unskilled manual labourer who had been in the employment of the plaintiff for a single day as it was to a chief chemist with many years service (at 73). Their Lordships referred to the "real raison d'etre" of the agreement was the proximity of the two factories and observed that there was no provision limiting the duration of the agreement to the period during which such proximity might continue. Their Lordships held that the reciprocal restraints were unreasonable in the interests of the parties to it and were therefore void and unenforceable. 89Their Lordships also said that the "adequacy and stability" of the parties' respective workforce was an interest which employers were entitled to protect by all legitimate means, such as by paying good wages and making employment attractive. However their Lordships said (at 74): But an employer has no legitimate interest in preventing an employee, after leaving his service, from entering the service of a competitor merely on the ground that the new employer is a competitor. The danger of the adequacy and stability of his complement of employees being impaired through employees leaving his service and entering that of a rival is not a danger against which he is entitled to protect himself by exacting from his employees' covenants that they will not, after leaving his service, enter the service of any competing concern. If in the present case the plaintiffs had taken a covenant from each of their employees that he would not enter the service of the defendants at a time during the five years next following the termination of his service with the plaintiffs, and the defendants had taken from their employees covenants restraining them in similar terms from entering the employment of the plaintiffs, we should have thought that (save possibly in very exceptional cases involving trade secrets, confidential information and the like) all such covenants would on the face of them be bad as involving a restraint of trade which was unreasonable as between the parties. Here the plaintiffs and the defendants have, as it seems to us, sought to do indirectly that which they could not do directly, by reciprocal undertakings between themselves not to employ each other's former employees, entered into over the heads of their respective employees, and without their knowledge. It seems to us to be open to question whether an agreement such as that, directed to preventing employees of the parties from doing that which they could not by individual covenants with their respective employers validly bind themselves not to do, should be accorded any greater validity than individual covenants by the employees themselves would possess. 90The present case is different. This is not a joint embargo on employing each other's employees. This is a promise by TOLL not to solicit BIS' employees for 18 months but with a very important exception to that promise. That exception provides TOLL with freedom to employ BIS' employees by either a bona fide advertising campaign or a bona fide recruiting campaign "targeted to a wide audience of potential application". 91TOLL submitted that prior to the entry into the Confidentiality Deed it knew that off-road load and haul contracts were profitable and that they formed the largest part of BIS' revenue. It claimed it had seen the financial information about the business during the Gulf Transport due diligence in 2010 and knew that BIS had acquired Gulf. Deutsche Bank had advised TOLL that BIS was profitable and represented a good opportunity. 92It was submitted that any suggestion that TOLL discovered from the confidential information that BIS had a profitable business in DPRTs, and having discovered this decided to poach BIS employees rather than purchase the business, should be rejected because the evidence does not support such a finding. I agree with that submission. TOLL contended that it already operated a similar business and already knew the business was profitable. It emphasised the unchallenged evidence of Mr Elmer and Ms Gibson that TOLL did not accept the financial figures put forward by BIS and withdrew from the information process early because it felt that BIS' forecasts were optimistic and its questions about the figures were not being answered. It also submitted that merely to know that a business is profitable does not assist a competitor to take actual steps to compete in a way that places the other competitor at a disadvantage by reason of that knowledge. 93TOLL submitted that the confidential information to which it had access pursuant to the Confidentiality Deed did not provide it with any staff connection that assisted the identification and targeting of employees of BIS. It is not in issue that TOLL did not receive information about employees that would assist with the identification and solicitation of particular employees. TOLL submitted that this is compelling evidence that enforcement of the restraint will not act to protect BIS from any use of the confidential information or staff connection possessed by TOLL by reason of the due diligence process. It was submitted that it has not been proved that the enforcement of clause 3.2 would serve to protect any legitimate interest of BIS, but rather only its interest in frustrating competition by TOLL. As I have said above it is possible to target specific areas of a business on the basis of information other than employee information. 94TOLL submitted that it would be against the public interest to restrain it for 18 months while BIS remains free to exercise its freedom of trade and whilst its own employees could not be restrained for more than 3 to 6 months. It was emphasised that BIS' own estimation of the period needed to protect its legitimate interests was expressed in the relevant restraint periods in the employment contracts of only 3 and 6 months. 95TOLL also submitted that the enforcement of clause 3.2 would be a precedent of significant concern to commercial competition in the Australian economy. It submitted that it would encourage the inclusion of very broad restraints not reasonably limited appropriately to the legitimate concerns of the parties or the public interest where, as events turn out, there is little or no legitimate interest threatened. TOLL submitted that parties that engage in "teaser" exercises in which minimum confidential information is disclosed could entrap competitors with restraints on their freedom of trade and freedom to compete on the theoretical basis that at some stage the competitor might have obtained information that was of use to it. It was submitted that such interference with the freedom of the market, where the clear balance of convenience favours the restraint not being enforced, is against the public interest. 96It is not really in issue that it was common for both BIS and TOLL to seek to entice each other's employees into their employment. 97TOLL had already made contact with the defendant prior to the execution of the Confidentiality Deed. His employment was as a result of the communications in 2010, 2011 and finally in mid 2012. Indeed the defendant invited TOLL to approach him in June 2012 because he anticipated that he would not fit within the BIS organisation after that date. 98TOLL submitted that in line with what was said in Kores Manufacturing Co Ltd v Kolok Manufacturing Co Ltd [1958] 2 All ER 65 at 74 it is impermissible for BIS to extract a covenant from TOLL preventing it from employing BIS' former employees when BIS could not extract a covenant from its employees in those terms. 99Consideration of a restraint between two large commercial organisations is different from a consideration of a restraint between an employer and an employee. However if a restraint between two organisations impacts upon employees in an unreasonable manner and in restraint of trade it may be held to be unenforceable. As Lord Hodson said in Esso Petroleum Co Ltd v Harper's Garage (Stourport) Ltd [1968] AC 269 at 318: When one remembers that the basis of the doctrine of restraint of trade is the protection of the public interest, it is not difficult to see how the law developed in its conception of reasonableness as the test which must be passed in order to save a contract in restraint of trade from unenforceability. 100Clause 3.2 of the Confidentiality Deed is not a clause of the type that fell foul of the restraint of trade doctrine in Kores Manufacturing Co Ltd v Kolok Manufacturing Ltd. It may have been a different matter had the carve out provision not been included. However that provision enabling the employment of any of the employees of BIS whether they were employed at the time of the Confidentiality Deed or otherwise makes reasonable a clause that might otherwise have been unreasonable. 101However there is one aspect of clause 3.2 that TOLL submits is unreasonable, notwithstanding the carve out provision. It was submitted that the words "hire or engage for the provision of services" prevents TOLL from employing a former employee of BIS who it does not solicit or cause to leave the employment of BIS and who approaches it for the purpose of seeking employment. I agree with TOLL's reading of the clause that those words would capture a former employee of BIS who is not being solicited by TOLL. It seems to me that having regard to the context in which those words appear, including the heading of the clause, the intention of the parties was probably that only those employees that TOLL solicited should be covered by the restraint. Those words should be "blue pencilled" out of the clause. Although such a term has been criticised, I am satisfied that clause 3.2 includes a combination of several covenants and that it is permissible to sever these words: SST Consulting Services Pty Ltd v Rieson [2006] HCA 31; (2006) 225 CLR 516 at [43]-[48] per Gleeson CJ, Gummow, Hayne, Heydon and Crennan JJ; Attwood v Lamont [1920] 3 KB 571 at 593 per Younger LJ. Such an approach may also be permissible pursuant to s 4(3) of the Restraints of Trade Act 1976. 102The breadth of the expression "advertising or recruiting campaign" provides a great deal of freedom to TOLL. The ways in which TOLL might recruit (as opposed to advertise for) employees are varied. TOLL might employ a recruitment agency to assist it with its recruitment campaign. Alternatively TOLL might have a recruitment campaign at a trade fair for employees to come to its DPRT services business. 103TOLL submitted that there is nothing that it obtained in or from the due diligence process that requires protection. It seems to me that if parties assisted not only by lawyers but also by investment bankers, decide to enter into a restraint clause of the type in this case, it ill behoves them to then claim that it is unenforceable because it is in restraint of trade having regard to the paucity of the material that they saw in the due diligence process. 104It is in the public interest to preserve a system that enables large commercial organisations to offer equity investment to third parties without compromising or damaging the successful operation of their businesses. TOLL decided to enter into a contractual relationship with BIS for the purpose of "considering, documenting and/or implementing" a potential equity investment in BIS or a purchase of BIS' shares or assets. If those parties who gain access to confidential information by, in part, proffering a promise not to solicit the target's employees are released from their promises because they decided not to proceed with a proposed transaction and claim they did not really see very much confidential information, the public interest will not be well served. Rather it would foster a system of uncertainty in contractual relationships particularly in the very important aspect of the equity investments in large commercial organisations. 105TOLL submitted that there was no legitimate interest to be protected by clause 3.2. I do not accept that submission. The legitimate interest that was protected by clause 3.2 was BIS' confidential information and its business operations that TOLL, by its own admission, was seeking to affect, either by an equity investment or purchase of shares or by competing in the market place to increase its market share. BIS agreed that TOLL could see what TOLL accepted was BIS' "secret, highly confidential and commercially valuable" confidential information. The fact that TOLL did not see as much as it might have hoped to see is not to the point in deciding whether the restraint was reasonable. Nor is the fact that TOLL abandoned the process after a short time. 106I am satisfied that the restraint as agreed was reasonable. I am not satisfied that it offends public policy. Discretion 107I am satisfied that TOLL should be held to its bargain. However I am also satisfied that the words "hire or engage for the provision of services" should be severed from clause 3.2. 108I accept that the approach made to the defendant occurred in 2010 and continued in 2011 and 2012. I also accept Mr Elmer's evidence that he did not at any stage wish to be in breach of the Confidentiality Deed. I accept that he was ignorant of its terms. I intend to grant an injunction restraining the defendant from taking up employment with TOLL in its DPRT services business until after 30 April 2013.I am satisfied that the circumstances of the continuing dialogue between TOLL and the defendant over the 18 months prior to the execution of the Confidentiality Deed justify an exercise of discretion in refusing to grant any further injunction against TOLL employing the defendant after 30 April 2013. It is appropriate that TOLL be restrained from employing the defendant in its DPRT business until after 30 April 2013 unless it is willing to provide an undertaking not to do so. 109The approach adopted by TOLL in its correspondence with BIS in August and September 2012 suggests that it wished to comply with clause 3.2 of the Confidentiality Deed. It may well be that TOLL may give an undertaking to the Court to obviate the need for an injunction in respect of the employment of persons other than the defendant. I will hear from TOLL in this regard on 4 December 2012 when the matter is listed for the filing of Short Minutes of Order reflecting these findings. Other Employees 110Two other employees, Mr Chard and Mr Wisniewski, who were both employed by BIS at the date of the Confidentiality Deed, have now been employed by TOLL. It was submitted on behalf of BIS that unless these employees responded to a bona fide advertising or recruitment campaign targeted to a wide audience, their engagement also breaches clause 3.2 of the Confidentiality Deed. It was submitted that because the question of the bona fide advertisement is an exception to the restraint and turns on facts known only to TOLL, at least the evidentiary burden rests with TOLL to prove the exception applies. It was submitted that TOLL has failed to discharge that burden. 111Neither of these employees are parties to these proceedings. The evidence discloses that there were advertisements placed on the internet for both positions of these employees (Operations Manager, Iron Ore and Maintenance Manager, Iron Ore respectively). However in respect of each position an "authority to recruit" form authorising a "direct approach to external candidate" was completed in early July 2012 (Ex E (Confidential), Tabs 14 and 15). This denoted that a decision had been made to approach a particular candidate directly (tr 130). It is probable that these forms related to Mr Chard and Mr Wisniewski. It was submitted that on the face of the forms a direct recruitment occurred as opposed to an approach being made to TOLL as a result of an advertising campaign. It was also submitted that the subsequent advertising campaign was not bona fide because the decision to recruit both of these employees had already been made. 112It was also submitted that the Court would not exercise its discretion in respect of the restraint having regard to the fact that neither Mr Chard or Mr Wisniewski has been joined to these proceedings. Not only would the injunction sought require TOLL to cease employing these men, but also to cease the employment for a period much longer than the restraint period in their respective contracts with BIS, being three and six months respectively. In this regard TOLL relied upon what the Full Federal Court said in News Limited v Australian Rugby Football League (1996) 64 FCR 410 at 524, quoting Cumming-Bruce LJ in Miller v Jackson [1977] QB 966 at 988: An order which directly affects a third person's rights against or liabilities to a party should not be made unless the person is also joined as a party. If made, the order will be set aside. 113Similarly TOLL relied upon what the majority said in Patrick Stevedores Operations No 2 Pty Limited v Maritime Union of Australia (No 3) [1998] HCA 30; (1998) 195 CLR 1 at 41-42, per Brennan CJ, McHugh, Gummow, Kirby and Hayne JJ, that the rights of the parties are not the only rights considered in determining where the balance lies and that courts of equity will not ordinarily, and without special necessity, grant an injunction when it will have the effect of very materially injuring the rights of third persons not before the Court. 114I am not satisfied that it is appropriate to make any orders in respect of persons who are not party to the proceedings. Should BIS wish to proceed with applications that affect Messrs Wisniewski and Chard, they will have to make application to amend to join them to the proceedings and provide them with an opportunity to be heard. Conclusion and Orders 1.I am satisfied that the restraint in clause 14.2 of the contract of employment between BIS and Deryl George Freeman is valid and enforceable. 2.Deryl George Freeman is restrained until 30 April 2013, either personally or otherwise from undertaking, being employed or engaged in, providing services to, or otherwise being involved in the business of TOLL or its related entities that provide DPRT services. 3.I am satisfied that the restraint in clause 3.2 of the Confidentiality Deed, excluding the words "hire or engage for the provision of services", between BIS and TOLL is valid and enforceable. 4.I refuse to grant an injunction against TOLL preventing it from employing Mr Freeman after 30 April 2013. 5.I will hear from TOLL on 4 December 2012 as to its willingness to give any undertakings to the Court referred to in these reasons. 6.I will hear from BIS on 4 December 2012 in respect of any application it may wish to make in respect of Mr Wisniewski and/or Mr Chard. 7.I list the matter on 4 December 2012 at 10.00 am for the filing of Short Minutes of Order and the hearing of any other relevant applications. ********** Amendments 17 December 2012 - change s 4(1) to s 4(3). Amended paragraphs: 101 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: 17 December 2012