Skye Group Pty Ltd v Michael Doherty [2014] NSWSC 1486

Supreme Court New South Wales

Medium Neutral Citation: Skye Group Pty Ltd v Michael Doherty [2014] NSWSC 1486 Hearing dates: 27, 28 October 2014 Decision date: 28 October 2014 Jurisdiction: Equity Division - Duty List Before: Slattery Decision: See paragraphs [37] and [38]. Catchwords: PROCEDURE - interlocutory issues - plaintiff seeks injunction to restrain defendant, a former employee, from using confidential information and from breaching a restraint in a contract of employment - whether a serious question to be tried - whether the balance of convenience favours the grant of an injunction. Legislation Cited: Contracts Review Act 1980 (NSW) Cases Cited: Kolback Securities Ltd v Epoch Mining (1987) 8 NSWLR 533 Australian Broadcasting Commission v Lenah Game Meats Pty Ltd (2001) 208 CLR 199 Category: Interlocutory applications Parties: Plaintiff: Skye Group Pty Ltd (ACN 066 197 037) Defendant: Michael Gerard Doherty Representation: Counsel: Plaintiff: R. Goot SC, S. Prince, M. Kloucek Defendant: T. Brennan Solicitors: Plaintiff: Jane Zylstra, Brand Boutique Lawyers Defendant: Steven Marc Penning, HWL Ebsworth File Number(s): 2014/303022 Publication restriction: No

EX TEMPORE Judgment 1The defendant in these proceedings, Mr Michael Doherty, formerly worked for the plaintiff, Skye Group Pty Ltd (Skye). He separated from his employment on 7 October this year. He had worked for Skye since March 1996. 2Skye brings proceedings for interlocutory relief to restrain Mr Doherty from using confidential information that Skye alleges he acquired in the course of his employment and to restrain him from breaching certain restraint provisions in his alleged contract of employment. His new employer is a company Denstock Pty Ltd (Denstock). 3The matter commenced by way of summons which came before Rein J for leave for short service on 15 October and for hearing on 17 October. His Honour made orders on that occasion for the delivery up of certain confidential information by 20 October and for the non-disclosure of the plaintiff's confidential information by the defendant. These orders were made by consent on 17 October. The matter returned to the duty list yesterday because Skye contends that further relief is now warranted. The further relief it wants is contained in draft order 12 of the short minutes of order provided to the Court, which is the following: "12. Order that (without any derogation from the consent orders made on 17 October 2014), pending the interlocutory hearing or further order of the Court, the defendant will not directly or indirectly canvas, solicit, or compete for the custom of or exploit or engage in business with any of the following clients or suppliers of the Plaintiff: (i)Anaconda Unit Trust (ii)Super Retail Group Limited (iii)Myer Holdings Limited (iv)Parsons Logistik Pty Limited (v)Fire & Safely Solutions Pty Limited (vi)Stewart and Heaton Clothing Company Co. Pty Ltd (vii)The Walking Company (viii)Jolly Swagman (ix)Hoys Ski (x)Rays Ski Shop (xi)Auski" 4All the other orders and directions about which the parties have put submissions to the Court are now the subject either of agreement or orders. They are mainly procedural directions designed to prepare for an interlocutory hearing, which is planned to take place next Monday 3 November, or such time shortly thereafter as the Court is able to accommodate the parties. This will still only be an interlocutory hearing and whatever happens then, a case of this kind should be a candidate for going into the Expedition List for an early final hearing. 5The defendant, Mr Doherty, has responded in the course of argument by making an open offer of disclosure of certain information before the final hearing. This was done in the form of certain short minutes of order, which the defendant proffered to the plaintiff and to the Court to satisfy questions of the balance of convenience. Those orders were as follows: "1. The defendant will file and serve by 4pm on 29 October 2014 an Affidavit which describes any confidential information of the Plaintiff within the meaning of that term in the document which appears at pages 15 to 22 of the Affidavit of John Huxtable Zylstra sworn 15 October 2014 which is in his possession. 2. The Defendant will file and serve by 9am on 3 November 2014 an Affidavit in which he describes any meeting or communication that he has had as an employee of Denstock to that time with any of: (i)Anaconda Unit Trust; (ii)Super Retail Group Limited; (iii)Myer Holdings Limited; (iv)Parsons Logistik Pty Limited; (v)Fire and Safety Solutions Pty Limited; (vi)Stewart and Heaton Clothing Company Co Pty Limited; (vii)The Walking Company; (viii)Jolly Swagman; (ix)Hoy Skiing; (x)Ray's Ski Shop; (xi)Auski" 6These two short minutes define the different contentions of the parties. The Court is guided in the granting of interlocutory relief by the decision of the High Court in Australian Broadcasting Commission v Lenah Game Meats Pty Ltd (2001) 208 CLR 199. The Court must consider whether there is a serious question to be tried and whether the balance of convenience warrants the grant of an interlocutory injunction. What is sought is a present restraint, and the restraint if wholly or partly granted it is one that may have implications for the disposition of the matter at final hearing, the Court is mindful of the following comments made by McLelland J in Kolback Securities Ltd v Epoch Mining (1987) 8 NSWLR 533 to the effect that Court is entitled in such circumstances to take into account the prospect of success of the parties at final hearing when granting or refusing interlocutory relief: "As I see it, the position is as follows. Where a plaintiff's entitlement to ultimate relief is uncertain, the Court, in deciding to grant or refuse an interlocutory injunction, must consider what course is best calculated to achieve justice between the parties in the circumstances of the particular case, pending the resolution of the uncertainty, bearing in mind the consequences to the defendant of the grant of an injunction in support of relief to which theplaintiff may ultimately be held not to be entitled, and the consequences to the plaintiff of the refusal of an injunction in support of relief to which the plaintiff may ultimately be held to be entitled: see, eg, Appleton Papers Inc v Tomasetti Paper Pty Ltd [1983] 3 NSWLR 208 at 216; A v Hayden (No 1) (1984) 59 ALJR 1 at 4-5; 56 ALR 73 at 79. Where the uncertainty depends in whole or in part on a contested question of fact it is not appropriate for theCourt to decide that question on the interlocutory application. Where the uncertainty depends in whole or in part on a contested question of law, it may or may not be appropriate for the Court to decide that question on the interlocutory application, depending on circumstances, eg, whether the question is novel or difficult, or is susceptible of resolution on the present state of the evidence, or whether the urgency of the matter renders it impracticable to give proper consideration to the question: see, eg, A v Hayden (No 1) (at 4; 78); Cohen v Peko-Wallsend (1986) 61 ALJR 57 at 59; 68 ALR 394 at 397. If the Court does decide the question of law the uncertainty is to that extent removed. Unless the plaintiff shows that there is at least a serious question to be tried which if resolved in its favour would entitle it to final relief, then the requirements of justice as between the parties will dictate that an interlocutory injunction should be refused: Australian Coarse Grain Pool Pty Ltd v Barley Marketing Board of Queensland (1982) 57 ALJR 425; 46 ALR 398; Tableland Peanuts Pty Ltd v Peanut Marketing Board (1984) 58 ALJR 283; 52 ALR 651; A v Hayden (No 1); Castlemaine-Tooheys Ltd v South Australia (1986) 60 ALJR 679; 67 ALR 553 and Cohen v Peko-Wallsend Ltd. Apart from this, although normally the Court "does not undertake a preliminary trial, and give or withhold interlocutory relief upon a forecast as to the ultimate result of the case" (Beecham Group Ltd v Bristol LaboratoriesPty Ltd (1968) 118 CLR 618 at 622), there are some kinds of case in which for the purpose of seeing where lies the balance of convenience (or more specifically"the balance of the risk of doing an injustice" - see per May LJ inCayne v Global Natural Resources plc [1984] 1 All ER 225 at 237, cf per Brennan J in Brayson Motors Pty Ltd v Federal Commissioner of Taxation (1983) 57 ALJR 288 at 292; 46 ALR 279 at 285), it is desirable for the Court to evaluate the strength of the plaintiff's case for final relief: see, eg, Brayson Motors Pty Ltd v Federal Commissioner of Taxation (at 292; 285); Castlemaine-Tooheys Ltd v South Australia at 682; 559. One class of case to which this applies is where the decision to grant or refuse an interlocutory injunction will in a practical sense determine the substance of the matter in issue: see, eg, NWL Ltd v Woods [1979] 1 WLR 1294 at 1306-1307; [1979] 3All ER 614 at 625-626 per Lord Diplock; Cayne v Global Natural Resources plc. The present is such a case. The substantial matter in issue is whether Epoch should be permitted to proceed with the issue of non-renounceable rights in accordance with the announcement of 13 March 1987. That will be irrevocably determined in a practical sense by the grant or refusal of an interlocutory injunction." 7That is not to say the Court is predetermining matters that will be in issue at a final hearing, but the issues at final hearing are not irrelevant. The parties, to a large extent, approached the regarding a serious question to be tried issue on that basis. Quite extensive arguments were put from both sides of the bar table of a kind that would be heard at final hearing. 8Some more background is necessary.