Supreme Court New South Wales Medium Neutral Citation: BGC Partners (Australia) Pty Limited v Hickey [2016] NSWSC 90 Hearing dates: 2, 3 and 11 February 2016 Decision date: 18 February 2016 Jurisdiction: Equity - Expedition List Before: Stevenson J Decision: Defendant to be restrained until 11 September 2016 Catchwords: CONTRACTS – EMPLOYMENT - RESTRAINT OF TRADE – where contract of employment contained restraints of trade – where restraints of trade were to operate during and post-employment – where employee resigned and sought employment with competitor – application to restrain employee from working for competitor – whether restraint of trade clauses reasonable and valid – legitimate and protectable interests – how long a restraint was reasonable in the circumstances to protect employee's legitimate protectable interests – exercise of discretion as to relief sought; CONTRACTS – EMPLOYMENT –REPUDIATION/TERMINATION – where employee repudiated contract by way of early resignation – where repudiation not accepted by employer and contract affirmed – whether contract still on foot – distinction between contract of employment and relationship of employee/employer – whether employment relationship terminated by resignation; CONTRACTS – INTERPRETATION – implied terms – whether term may be implied in contract of employment that employee can terminate on reasonable notice – where contract already provides express term for termination – whether such term covers the field - whether terms may be implied which contradict express terms Legislation Cited: Restraints of Trade Act 1976 (NSW) Cases Cited: BP Refinery (Westernport) Pty Limited v Hastings (1977) 180 CLR 266 Commercial Plastics Ltd v Vincent [1965] 1 QB 623 Curro v Beyond Productions Pty Ltd (1993) 30 NSWLR 337 Herbert Morris Ltd v Saxelby [1916] 1 AC 688 Koops Martin Financial Services Pty Ltd v Reeves [2006] NSWSC 449 Lindner v Murdock's Garage (1950) 83 CLR 628 Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd [2015] HCA 37 Nordenfelt v Maxim Nordenfelt Guns and Ammunition Co Ltd [1894] AC 535 Tank Lining Corp v Dunlop Industries Ltd (1982) 140 DLR (3d) 659 Tullett Prebon (Australia) Pty Ltd v Purcell [2008] NSWSC 852; 175 IR 414 Vandervell Products Ltd v McLeod [1957] RPC 185 Woolworths Ltd v Olson [2004] NSWCA 372 Texts Cited: N Seddon, R Bigwood, M Ellinghaus, Cheshire & Fifoot: Law of Contract, (10th ed 2012, LexisNexis) Category: Principal judgment Parties: BGC Partners (Australia) Pty Limited (Plaintiff) Anthony Hickey (Defendant) Representation: Counsel: J J E Fernon SC with R M Foreman (Plaintiff) R M Goot SC with S E J Prince and B Rauf (Defendant) Solicitors: Maddocks Lawyers (Plaintiff) Toomey Pegg Lawyers (Defendant) File Number(s): SC 2015/363122 Judgment Introduction 1. The plaintiff, BGC, is one of the three companies carrying on business in Australia in the capital markets broking industry. Relevantly, BGC carries on a brokerage business in that part of the wholesale financial market which deals with interest rate swaps. 2. During 2015, BGC had two main competitors in this market; Tullett Prebon (Australia) Pty Ltd and ICAP Australia Pty Ltd. 3. BGC, Tullett and ICAP employ, in total, around 45 interest rate swap brokers in their Australian operations. Those brokers are, for the most part, well known to each other. 4. The defendant, Mr Hickey is a senior broker who is (or was; that is one of the issues in these proceedings) employed by BGC to broker interest rate swaps. 5. These proceedings arise from a decision made by Mr Hickey to migrate to ICAP. The contract of employment 1. Mr Hickey commenced employment with BGC, on 1 April 2006 as a Senior Broker, Interest Rates Swaps, pursuant to a contract dated 22 March 2006 ("the Contract"). His current salary is $400,000 per annum. He may also receive bonuses and other benefits. 2. The Contract incorporated, by reference, a document called "Terms and Conditions". 3. Clause 1(a) of the Contract is in the following terms: "The provisions of this Agreement will come into effect on the date hereof [22 March 2006]. Your employment under this Agreement will commence as soon as you are free and able to do so, but in any event no later than 5 May 2007 (the 'Commencement Date')." 1. Clause 1(b) of the Contract was in the following terms: "Your employment is for an initial period of three (3) years from the Commencement Date, (the 'Initial Period'). Thereafter (subject to the other provisions in this Agreement) it shall be extended automatically for successive periods of one (1) year (the "Renewal Period"), on the same terms and conditions as contained in this Agreement, from the end of the Initial Period or the end of any subsequent Renewal Period, as appropriate, unless otherwise agreed." 1. With effect on 1 August 2011, cl 1(b) was amended to extend the "Initial Period" for a period of five years from 1 August 2011 (that is, to 31 July 2016). 2. With effect on 1 September 2013, cl 1(b) was further amended to extend the "Initial Period" for a further two years to 31 July 2018. 3. Clause 1(c) of the Contract is in the following terms: "Either party may give notice to the other in writing to terminate the Agreement, such notice to be given on any date within the last two (2) weeks of the final month of the Initial Period or a Renewal Period (as appropriate). Following the giving of such notice, the employment shall come to an end 3 months following the expiry of the Initial Period or Renewal Period as the case may be." 1. Clause 6 of the Contract is headed "Early Termination" and reads: "You are referred to the additional provisions in the Terms & Conditions". 1. The Terms and Conditions made no further provision for the termination of the Contract by Mr Hickey but did provide that BGC could: 1. summarily dismiss Mr Hickey without notice in circumstances where it was entitled to do so at common law including where Mr Hickey had substantially breached the terms of his employment contract, wilfully refused or neglected to carry out instructions or duties or engaged in dishonesty or other instances of serious misconduct or serious incompetence (cl 10.1); 2. terminate the Contract on one month's notice if it was of the opinion that Mr Hickey was not physically or mentally fit to perform his duties (cl 10.3); and 3. deal with Mr Hickey in accordance with BGC's "current dismissal and disciplinary procedures" as set out in its "Employee Handbook" (cl 11.2). 1. Clause 2.3 of the terms and Conditions provides that: "You must devote the whole of your working time to the business of the Company. For this reason, during your employment, you are not permitted, without the written consent of the Company, to have an interest in any other company, business or enterprise (whether as an employee, contractor, partner, consultant, agent, shareholder or otherwise). You may, however, acquire or own, without disclosure, by way of investment only, less than 1% of the outstanding securities of any class of any corporation that is listed on a recognised stock exchange or traded in the over-the-counter market." 1. Clause 9 provides for "Suspension and Garden Leave" and was in the following terms: "9.1 In circumstances where the Company considers it reasonable (including but not limited to, investigating any disciplinary matter against you) it reserves the right at its sole discretion, to require you to remain at home on paid leave for a period of no more than three months in aggregate or to assign to you such other duties consistent with your abilities in addition to or instead of your duties herein. 9.2 During any period after you or the Company has given notice to terminate your employment or notice not to renew your contract or if you should otherwise seek to leave your employment with the Company, then the Company will at its discretion be under no obligation to assign any duties to you or to provide any work for you, may transfer you to a different product area and/or will be entitled to exclude you from its premises. This will not affect your entitlement to receive your salary (if any). 9.3 During any period of suspension or garden leave under this paragraph 9, you agree that: 9.3.1 save for routine social contact, you will not contact employees or clients of the Company with whom you have previously dealt while employed by the Company; and 9.3.2 if required to do so, you must return immediately to the Company any Company property, any Associated Company's property and any property of its or their clients in accordance with paragraph 10 below." 1. Clause 15 of the Terms and Conditions is headed "Protection of the Company's Interests". Clauses 15.1 and 15.2 are in the following terms: "15.1 Without the written prior consent of the Company and whether alone or with others, directly or indirectly for your own benefit or the benefit of any person or organization [sic] you shall not, during the term of your employment, or for a period of twelve (12) months after its termination, offer to employ or enter into partnership, induce or attempt to induce any individual to whom this paragraph applies to leave the employment of or to discontinue the supply of his/her services to the Company or any Associated Company without the Company's prior written consent (whether or not such action would result in a breach of contract by such individual) nor shall you encourage counsel or procure that individual to do so. This paragraph shall apply to any individual who is an employee or who provides services to the Company or any Associated Company and whom you have managed or with whom you have or have had material and/or regular dealings in the course of your employment during the twelve 12 months prior to the termination of your employment and who is employed by or has provided services to the Company (or an Associated Company) in a senior or managerial capacity in or any technical, IT, sales, marketing, business development role, provided this restriction shall not apply to non-management (clerical or administrative or manual) staff. 15.2 Without the written prior consent of the Company and whether alone or with others, directly or indirectly for your own benefit or the benefit of any person or organization [sic] you shall not during your employment or for a period of 6 months after its termination: 15.2.1 solicit or entice away any client or counterparty of the Desk (or any desk to which you are moved in accordance with your employment contract or these terms and conditions) of the Company or any Associated Company (whether a company or an individual) with which or whom you have had material and/or regular dealings in the course of your duties or, where this provision would apply after your employment ends, any time during the twelve (12) months prior to its termination; 15.2.2 in competition with the Restricted Business, seek to procure orders from, deal or carry on business with, or transact business with, any client or counterparty of the Desk (or any desk to which you are moved in accordance with your employment contract or these terms and conditions) of the Company or any Associated Company (whether a company or an individual) with which or whom you have had material and/or regular dealings in the course of your duties or, where this provision would apply after your employment ends, any time during the twelve (12) months prior to its termination; 15.2.3 at the Company's option exercisable no later than 10 working days after the date of termination of your employment and provided that it continues to pay an amount equivalent to your pre-termination Salary engage the services of, render services to or become interested in (as owner, stockholder, partner, lender or other investor, director, officer, employee, consultant or otherwise) any business activity that is in competition with the Restricted Business". 1. "Restricted Business" was defined in cl 15.3 of the Terms and Conditions to mean, in substance, the business of BGC in which Mr Hickey was "materially concerned" or for which he had "management responsibility". 2. In cl 15.4 Mr Hickey acknowledged that restraints in cl 15.2 were "reasonable and necessary for the protection of [BGC's] legitimate interests". Mr Hickey's purported resignation 1. On 12 November 2015 Mr Hickey gave BGC a notice of resignation in which he stated: "In August this year I told Mark Webster at dinner when he offered me the position of Managing Director of BGC Singapore (which I declined) that I had been approached by ICAP about possible employment. At lunch on 29 October 2015 I told you that I had been approached by ICAP and was genuinely considering leaving BGC. I have not been happy about events surrounding the recent contractual negotiations and have decided to resign. I therefore give notice of the termination of my employment to take effect at the end of business on 11 December 2015. The notice I am giving is reasonable and appropriate in the circumstances taking into account my employment contract, and applicable legislative and award provisions. I will of course co-operate in an orderly departure which I would be prepared to discuss at your convenience." 1. The "award provisions" to which Mr Hickey referred were those in the Banking, Finance and Insurance Award 2010 (the "Award"). Mr Hickey referred to these provisions in more detail in his letter of 25 November 2015 (see below). 2. On 16 November 2015 BGC replied: "I refer to our discussion on Thursday, 12 November 2015 in which you gave me an undated letter titled 'resignation' purporting to give notice of your resignation from you employment with BGC Partners (Australia) Pty Limited ('BGC'). As discussed during that meeting, you are not entitled to terminate your employment at this time as under your employment agreement you are employed for a fixed term ending on 31 July, 2018. BGC does not accept your purported resignation and elects to continue your employment in accordance with the terms of your Employment Agreement. At this time, and until advised otherwise, BGC expects you to continue to comply with your contractual obligations." 1. On 25 November 2015 Mr Hickey wrote to BGC: "I maintain that I am entitled to resign on four weeks' notice. This means that my employment will end on 11 December 2015 in accordance with my letter of resignation. The reason I am entitled to do so includes, without limitation, the provisions of the Banking, Finance and Insurance Award 2010, which provides that an employee may resign on the giving of notice provided in the national employment standards (other than the additional week for employees aged over 45). In my case, this is four weeks." 1. Thus Mr Hickey sought to justify giving four weeks' notice of his intention to resign by reference to the Award. That contention was not pressed before me. 2. Mr Hickey ceased attending work at BGC on 11 December 2015. 3. On 18 December 2015, BGC's solicitors wrote to Mr Hickey's solicitors in the following terms: "We note your client's position that his contract and his employment with our client terminated on 11 December 2015. Our client does not accept that your client's employment or contract came to an end on 11 December 2015. Whether or not your client's employment and/or contract came to an end on 11 December 2015 will be determined by the Court in the hearing on 2 to 3 February 2016. Having regard to the matters referred to above, our client's position is that the occasion for the exercise of the option has not yet arisen. The effect of your client's position is that the occasion for the exercise of the option has arisen. In that context, our client hereby exercises the option referred to in clause 15.2.3 of the 'Terms & Conditions' in Mr Hickey's contract of employment. This exercise of the option referred to in clause 15.2.3 is made without admission or concession." 1. Mr Hickey has not attended work at BGC since 11 December 2015. Other than indicating its expectation that Mr Hickey would continue to attend for work, BGC has not requested Mr Hickey to return to work nor placed him on "gardening leave" pursuant to cl 9 of the Terms and Conditions or otherwise directed him to perform duties or attend work. Mr Hickey's arrangements with ICAP 1. On 11 November 2015 Mr Hickey signed three documents (each bearing date 10 November 2015). 2. The first was a contract of employment pursuant to which: 1. Mr Hickey's employment with ICAP "will commence as soon as you are lawfully able to do so, provided you are lawfully able to do so, by no later than 1 November 2016" (cl 1.1); 2. Mr Hickey's employment would be for an initial period of four years following "the actual date of commencement of employment" (cl 3.1(b)); 3. either party could terminate the contract by "giving to the other at least six months' prior written notice, such notice to expire only at the end of the Initial Period or on subsequent anniversaries thereof" (cl 3.1(b)); 4. Mr Hickey was to receive remuneration of $300,000 together with a "sign on payment" of $500,000 (to be paid on the last day of the Initial Period) (cll 6.1 and 6.4); and 5. Mr Hickey will be subject to a post contract restraint of six months in relation to working for a competitor or soliciting clients and nine months in relation to soliciting ICAP employees (cl 9). 1. In the second document, ICAP agreed to "accelerate" the "sign on payment" so that it was to be paid within 14 days of the date on which Mr Hickey actually commenced work for ICAP. 2. The third document was an indemnity by ICAP in relation to any legal costs "you may incur as a direct result of the change in your employment from [BGC]…to [ICAP]". That indemnity has the effect that ICAP is paying Mr Hickey's costs of these proceedings. BGC's claims 1. BGC commenced these proceedings on 10 December 2015. 2. On 11 December 2015 Bergin CJ in Eq ordered that the proceedings be expedited and fixed for hearing before me on 2 February 2016. 3. Her Honour also noted mutual undertakings designed to preserve the status quo pending determination of the proceedings. 4. By its amended summons, BGC seeks: 1. a declaration that Mr Hickey's employment contract with BGC has not been terminated and remains on foot (par 4); 2. an order that Mr Hickey be restrained from acting inconsistently with his obligations under cl 15.2 of the Terms and Conditions (see [17] above) until (in order of preference) 30 April 2019, 31 January 2019, 31 July 2018 or 11 June 2016 (par 5); 3. an order restraining Mr Hickey from dealing with confidential information (par 6); and 4. alternatively damages. 1. The rationale for the dates referred to at [35(b)] is that: 1. 11 June 2016 is six months after the date Mr Hickey last attended work at BGC; 2. 31 July 2018 is the expiry of the current "Initial Period" of the Contract (see [11] above); 3. 31 January 2019 is six months thereafter (corresponding to the six month period specified in cl 15.2 of the Terms and Conditions (see [17] above); and 4. 30 April 2019 is three months thereafter (corresponding to the three month period referred to in cl 1(c)) (see [12] above). 1. Mr Hickey accepts BGC is entitled, on a final basis, to an order restraining him from contravening cl 15.2 of the Terms and Conditions (that is an order in accordance with par 5 of the Summons) until 11 June 2016. 2. Mr Hickey also accepts that BGC is entitled, on a final basis, to an order restraining him from using confidential information (that is an order in accordance with par 6 of the Summons). Mr Hickey is also prepared to give undertakings to abide by cll 14.1 and 16.3 of the Terms and Conditions (which relate to BGC's confidential information and intellectual property). Relevant principles 1. The relevant principles are succinctly summarised in the following passage from the judgment of Brereton J in Tullett Prebon (Australia) Pty Ltd v Purcell [2008] NSWSC 852; 175 IR 414 (at [47]): "In New South Wales, a restraint of trade is valid to the extent that it is not against public policy [Restraints of Trade Act 1976 (NSW), s 4(1); Koops Martin Financial Services Pty Ltd v Reeves [2006] NSWSC 449 at [26]-[27]]. A restraint of trade is not contrary to public policy if it is reasonable as between the parties, and not unreasonable in the public interest, so that while affording adequate protection to the party in whose favour it is imposed, it is not injurious to the public [Nordenfelt v Maxim Nordenfelt Guns & Ammunition Co Ltd [1894] AC 535 at 565; Herbert Morris Ltd v Saxelby [1916] 1 AC 688 at 706- 707; Lindner v Murdock's Garage (1950) 83 CLR 628 at 653]. Whether a restraint is reasonable having regard to the interests of the parties depends on two, albeit related, considerations: first, whether the covenantee has a legitimate protectable interest, and secondly, whether the restraint is no more than reasonable for the legitimate protection of that interest. A covenantee is not entitled to be protected against mere competition; the legitimate interests which may be the subject of protection by covenant are in the nature of proprietary subject matter [Vandervell Products v McLeod [1957] RPC 185; Tank Lining Corp v Dunlop Industries Ltd (1982) 140 DLR (3d) 659 at 664], including trade secrets and confidential information, and goodwill including customer connection. The validity of a restraint is to be judged at the time at which the contract is made, by reference to what the restraint entitles or requires the party to do, rather than what they intend to do or have actually done [Nordenfelt at 573-574; Commercial Plastics Ltd v Vincent [1965] 1 QB 623 at 644; Curro v Beyond Productions [Pty Ltd (1993) 30 NSWLR 337] at 344; Woolworths Ltd v Olson [2004] NSWCA 372 at [40]]." BGC's legitimate protectable interest 1. It is common ground that BGC has a "legitimate protectable interest" for the purpose of the authorities discussed by Brereton J in its connection with its customers. 2. The relationship between BGC, and senior brokers such as Mr Hickey, with BGC's customers, or clients, was summarised by BGC's managing director, Mr Gunson, in his affidavit as follows: "17. All of BGC's clients in interest rate swaps, cross currency swaps and single currency basis swaps are banks. Each bank client employs its own traders who seek out broking services. A broker's role is to generate revenue for BGC. Revenue is generated by the commission charged by BGC on broking transactions undertaken with BGC's clients. Commission is charged to both the buyer and seller in a swaps transaction. 18. For each client BGC allocates a broker to be responsible for particular traders who trade on behalf of that client. Mr Hickey has been allocated traders, in particular from Deutsche Bank, NAB, Nomura Securities, Credit Agricole, Sumitomo Mitsui Banking Corporation, Bank of Nova Scotia, Bank of Tokyo Mitsubishi UFJ and Macquarie Bank. 19. In the last 12 months, Mr Hickey has had regular dealings with the traders referred to in the previous paragraph. The number and size of trades that are brokered varies, having regard to a range of factors including market conditions. However, Mr Hickey communicates to the traders referred to in the previous paragraph on a daily or almost daily basis, often many times a day. 20. In addition, in the last 12 months, Mr Hickey has also had regular dealings with traders from Westpac, Toronto Dominion, JP Morgan Chase, Barclays Bank, Daiwa and Merrill Lynch. Mr Hickey communicates with those traders less frequently than those in paragraph 18 above. 21. Each broker, including Mr Hickey, sits at the desk during the working day in front of a telecommunications board. A telecommunications board has direct lines of communication to the traders for whom the broker is responsible as well as other lines. The trader sits in front of a similar communications board and, through the board, is directly linked to the broker and able to talk to them through the line. 22. The broker's function is to match a buyer with a seller (also often referred to as a 'receiver' and a 'payer') of a product at an agreed price. Within BGC, the buyer is regarded as the counterparty to the seller, and the seller is regarded as the counterparty to the buyer. A transaction will typically take place very quickly. Traders trust the broker with whom they deal to facilitate their trades quickly in a highly competitive market where speed and trust between trader and broker are important. In the case of Mr Hickey his function is to match buyers and sellers of interest rate swaps, cross currency swaps and single currency basis swaps. As noted above, BGC earns commission on the trades facilitated by brokers such as Mr Hickey. 23. It is part of a broker's function to establish and maintain a close relationship with each of the client's traders allocated to the broker. The strength of this relationship is fundamental to the effectiveness of the broker. It is usual for a trader to have an association with brokers at BGC, ICAP and Tullett Prebon. It is usual for a trader wishing to trade a product to call the broker with whom he or she has the best relationship with first. 24. Because the relationship between BGC and the client is important for BGC's revenue, BGC expends considerable resources in building and strengthening these relationships. This is done because it is in the interests of BGC's business to ensure as far as possible that a client's trader prefers their BGC broker rather than a broker employed by one of BGC's competitors, such as ICAP. 25. BGC conducts promotional events to which the traders employed by BGC's clients are invited. The events are generally significant occasions. Brokers are invited to attend such events to be with and entertain the client's traders allocated to them. By way of example, in August 2014 and again in August 2015, BGC organised trips to New Zealand to watch the rugby which were attended by clients and Mr Hickey (among others). This type of event has become more common during my time at BGC. Such events are effective in establishing and maintaining relationships between traders and brokers. 26. Each broker also entertains traders, generally with lunch/dinner or drinks. This type of entertaining has taken place for as long as I can remember in my time in broking and is also regarded as effective in establishing and maintaining relationships between a client's traders and brokers." Is the Contract still on foot? 1. A threshold question dividing the parties is whether the Contract is still on foot. 2. The law draws a distinction between a contract of employment and the underlying relationship between an employer and employee. In Tullett Prebon Brereton J referred to the employer/employee relationship as the "actual employment" (at [30]). I shall adopt the same expression. 3. Now that Mr Hickey has ceased attending work at BGC (he has not done so since 11 December 2015 and has no intention of returning), his "actual employment" with BGC is over. 4. Is the Contract nonetheless on foot? The answer to that question has implications for the nature of Mr Hickey's ongoing obligations under cl 15.2. 5. Mr Hickey has purported to terminate the Contract by giving one month's notice and relying on his contentions that: 1. it is an implied term of the Contract that it is terminable on reasonable notice; and 2. one month's notice is reasonable. 1. The Contract makes provision, in cl 1(c) (set out at [12] above) for the circumstances in which either party "may give notice" terminating the Contract; namely by giving notice within the last two weeks of the final month of the Initial Period (that is between 17 and 31 July 2018). In that event, Mr Hickey's "employment" would come to an end 3 months following the expiry of the Initial Period: that is, on 31 October 2018. 2. Clause 1(c) is the only express provision in the Contract providing for termination (by either party) without cause and the only express provision available to Mr Hickey to terminate the Contract. BGC may terminate the Contract on the bases set out in cl 10 and 11 of the Terms and Conditions (see [14] above). 3. If, as Mr Hickey contends, it is an implied term of the Contract that he is entitled to terminate the Contract on reasonable notice, given by him at any time, cl 1(c) is otiose. There would simply be no need for the parties to have made the very specific provision found in cl 1(c) for an entitlement to terminate the Contract, if either could do so at any time on giving reasonable notice. Further, if it is an implied term of the Contract that Mr Hickey can terminate on reasonable notice, it must also be an implied term that BGC can do the same: in which case cll 10 and 11 would also be otiose. That circumstance points to the improbability of the parties intending any such implication. 4. The further question arises as to whether, on the proper construction of the Contract, the parties agreed that cl 1(c) covers the field, and sets out the only basis on which either party could terminate without cause; that is, as of right. If that is so, the implied term contended for could not arise, as it would be inconsistent with an express term of the Contract, as properly construed (see BP Refinery (Westernport) Pty Ltd v Shire of Hastings (1977) 180 CLR 266 at 283 and the numerous decisions of the High Court of Australia referred to at footnote 557 at [10.55] of N Seddon, R Bigwood, M Ellinghaus, Cheshire & Fifoot: Law of Contract, (10th ed 2012, LexisNexis)). 5. Clause 1(c) does not say, in terms, that it sets out the "only" basis on which the Contract may be terminated otherwise than for cause. 6. However, as I have said, it specifies a very precise period of time within which "either party may" (that is, has the right to) give notice terminating the Contract; a narrow window of two weeks. It also provides for a reasonably lengthy period following the giving of such notice (three months) before which "employment shall come to an end". 7. The question is whether a "reasonable businessperson" in the position of the parties would regard cl 1(c) as providing the only basis on which either party could bring the contract to an end otherwise than for cause. That enquiry will require: "…consideration of the language used by the parties in the contract, the circumstances addressed by the contract and the commercial purpose or objects to be secured by the contract." (see Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd [2015] HCA 37 per French CJ, Nettle and Gordon JJ at [47]). 1. In my opinion, a reasonable businessperson would come to this conclusion. First, as I have said, it would have been otiose for the parties to agree to the terms of cl 1(c), and to thus agree that notice of termination otherwise than for cause could occur during the two week period specified in the clause and then only take place three months after such notice if either party was free to terminate on some other, broader basis. Second, the contract addresses the circumstances in which a senior broker is engaged by one of only three players in the relevant market, where the number of brokers available to fill that role is very limited and where, to adopt Brereton J's words in Tullett Prebon when describing the same industry, "the various players are well known to each other" (at [53]). The evidence establishes that it was a mutually known fact that senior brokers in this industry are very often (if not invariably) parties to written contracts of employment which provide for notice periods similar to that in this case and for periods of post contractual restraint and that, for that reason, broking houses very often experience delay in recruiting replacement brokers. 2. Accordingly, I would construe cl 1(c) as representing the only basis on which, in the circumstances of this case, Mr Hickey was entitled to terminate the Contract. He was not entitled to terminate the Contract as he purported to do by his letter delivered on 12 November 2015. 3. A unilateral resignation by an employee, otherwise than in accordance with the terms of the contract of employment, is a repudiation of the contract. However, repudiation of the contract will only result in termination if the innocent party accepts it (per Brereton J in Tullett Prebon at [24]). 4. Mr Hickey has repudiated the Contract. 5. BGC made clear in its letters of 16 November, 27 November and 8 December 2015 set out above that it did not accept that repudiation. 6. Mr Goot SC, who appeared with Mr Prince and Mr Rauf on behalf of Mr Hickey, submitted that, by their solicitor's letter of 18 December 2015 (see [26] above) BGC had (despite its earlier correspondence) elected to accept Mr Hickey's repudiation and that, accordingly, the Contract came to an end. 7. Mr Goot relied, in particular on the following passage from that letter: "In that context, our client hereby exercises the option referred to in clause 15.2.3 of the 'Terms & Conditions' in Mr Hickey's contract of employment. This exercise of the option referred to in clause 15.2.3 is made without admission or concession." 1. Mr Goot pointed to the fact that the "option" referred to in cl 15.2.3 of the Contract was only exercisable by BGC "after the date of termination of [Mr Hickey's] employment" and submitted that the purported exercise of the option by BGC amounted to an assertion that Mr Hickey's employment had been terminated and thus an acceptance of Mr Hickey's repudiatory conduct. 2. I do not accept that submission. 3. The relevant paragraph is stated, expressly, to be in the context of the recitation by the author of the letter, in the preceding paragraph, of the competing contentions of the parties. The reference to the "exercise" of the option is on the assumption (not accepted by the author of the letter) that Mr Hickey's position "was correct". 4. Fairly read, the author of the letter was saying something to the effect that if, which was denied, and only if the contract of employment had come to an end, then BGC exercised the option referred to in cl 15.2.3. 5. Mr Hickey has repudiated his obligations under the Contract. That repudiation has not been accepted. The Contract remains on foot. The proper construction of the Contract 1. A further question arises as to the proper construction of the Contract. 2. The issue is whether the reference to "your employment" and "its" termination in cl 15.2 is a reference to the Contract, that is the contract of employment itself or, rather, is a reference to the relationship of employer and employee ("actual employment"). 3. Throughout the terms of the Contract, there are references to "this Agreement" or "the Agreement" and also to "your employment" or "the employment". 4. As Mr Fernon SC, who appeared with Mr Foreman for BGC accepted, the Contract has "life before employment". Thus, cl 1(a) provided that the Contract came into effect on its date (22 March 2006) but that Mr Hickey's "employment" is to commence as soon as Mr Hickey is "free and able to do so" (and in any event, by 5 May 2007). In fact, as I have said, Mr Hickey commenced at BGC on 1 April 2006. The date on which Mr Hickey actually started work at BGC is defined as the "Commencement Date" 5. There are a number of clauses in the Contact which measure time, whether expressly or implicitly, from the "Commencement Date" (for example cll 1(a) and 1(b), set out at [8] and [9] above) and also cl 3(a) which deals with calculations of required commission targets and speaks of the period "after the first six months of your employment hereunder" and the first and successive "12 months of your employment" (each of which periods are obviously to be measured from the "Commencement Date"). 6. In those clauses the expression "your employment" is obviously a reference to the period during which Mr Hickey was "actually" employed at BGC. 7. However, in other clauses, "employment" is equated with the Contract. Thus, cl 1(c) is directed to the question to when either party may "terminate the Agreement" and states that the consequence of giving the notice called for by the clause is that "the employment shall come to an end". 8. Another example is cl 9.2 of the Terms and Conditions (see [16] above) where provision is made for circumstances where BGC gives notice to "terminate your employment" or "not to renew your contract" and where Mr Hickey "should otherwise seek to leave your employment with" BGC. In that clause the words "your employment" and "your contract" are used interchangeably. 9. In my opinion, what the parties intended to mean by the expression "your employment" in cl 15.2 is informed by reading the whole of cl 15 together. 10. As I have set out above, cl 15 is headed "Protection of the Company's Interests" and includes prohibitions concerning staff solicitation (cl 15.1), client solicitation (cl 15.2.1), procuration of business from clients (cl 15.2.2) and working for competitors (cl 15.2.3). 11. The prohibition, in cl 15.1, concerning staff solicitation is said to apply during "the term of your employment" or for a period of 12 months "after its termination". 12. On the other hand, the prohibition in cl 15.2 against client solicitation and the like is expressed to be "during your employment" or for a period of 6 months "after its termination". 13. In my opinion a reasonable businessperson in the position of the parties would understand the prohibitions in each of cl 15.1 and 15.2 to be directed to the same general circumstances (albeit with differing post "termination" lengths of prohibition) and that the parties thus intended that the words "during your employment" in cl 15.2 have the same meaning as the words "during the term of your employment" in cl 15.1. 14. The words "during the term of your employment" (in cl 15.1) are not apt to refer to Mr Hickey's "actual employment". The use of the word "term" suggests the parties were referring to the Contract. That bespeaks the intention of the parties that the relevant prohibition is to apply first, during the subsistence of the contract of employment (the Contract) and for the specified number of months after the termination of the Contract. I would read "during your employment" in cl 15.2 to have the same meaning. 15. For those reasons I do not accept Mr Goot's submission that the prohibitions in cl 15.2 were enlivened as soon as Mr Hickey's "actual employment" ceased (that is when he ceased turning up for work). 16. Not only does that conclusion accord with my view of the proper construction of the words of cl 15 it also yields a far more reasonable result. 17. If Mr Goot's submission was correct, Mr Hickey could have caused the period of six months in cl 15.2 to run by simply downing tools, no matter what the Contract says. 18. I should add that I would construe the expression "during your employment" in cl 2.3 (see [15] above) the same way. That clause obliges Mr Hickey to devote "the whole of your working time" to BGC's business and states that Mr Hickey is not permitted to have any interest "in any other company" including as an employee "during your employment". My conclusions so far 1. The Contract is on foot. 2. The prohibitions in cl 15.2 apply for so long as the Contract is on foot (and for a period of six months after the Contract is terminated). 3. Accordingly, Mr Hickey remains bound by cll 15.2.1 and 15.2.2. 4. However, an issue arises as to whether Mr Hickey is currently bound by cl 15.2.3. Is Mr Hickey bound by the constraint at cl 15.2.3? 1. The structure of the chapeau to cl 15.2 suggests that it is directed to each of cll 15.2.1, 15.2.2 and 15.2.3. 2. However, cl 15.2.3 refers to BGC exercising the option contained within it "no later than 10 working days after termination of your employment". It also refers to the payment by BGC to Mr Hickey of his "pre-termination Salary". Those words make clear, in my opinion, that the clause is not enlivened until Mr Hickey's "employment" terminates; that is, as I have construed cl 15 as a whole, until after the date of termination of the Contract. 3. For those reasons, in my opinion, the restraint in cl 15.2.3 of the Terms and Conditions does not apply during the life of the Contract. 4. However, throughout the life of the Contract Mr Hickey remains bound by cll 15.2.1 and 15.2.2. He also remains bound by cl 2.3. The restraint 1. For those reasons, my opinion is that as the Contract remains on foot, Mr Hickey remains bound by the prohibitions in cll 15.2.1, 15.2.2 and 2.3 of the Contract. 2. Is that restraint valid? There is no suggestion in this case that it is against public policy. What is suggested is that it is unreasonable as between the parties as it goes further than is reasonably necessary to protect BGC's legitimate protectable interest in its customer connection. 3. As I have set out above, the validity of restraint is to be judged at the time that the contract is made by reference to what the restraint entitles or requires a party to do. What the parties intend to do and what they have actually done is not relevant to the question of validity. 4. It is common ground that the relevant date for consideration of the validity of the restraint is 13 September 2013, when the Contract was varied for the final time to extend the "Initial Period" to 31 July 2018. 5. As at 13 September 2013, the restraint obliged Mr Hickey, for so long as he was "employed" by BGC (that is, for so long as the contract was on foot) to not work for any other company (cl 2.3) and to not solicit BGC's clients (cll 15.2.1 and 15.2.2). 6. I see nothing unreasonable about such a restraint. Such a restraint was reasonably necessary to protect BGC's legitimate protectable interests in its client connection for so long as Mr Hickey was bound by the Contract. 7. Accordingly, I do not need to consider whether the restraint, and cl 2.3 in particular, may be narrowed in scope by application of the Court's power under s 4(1) of the Restraints of Trade Act 1976 (NSW). 8. But the question which now arises is whether, in the events that have happened, I should, as a matter of discretion, grant an injunction which holds Mr Hickey to that bargain. 9. There are a number of factors to consider. 10. The first is that Mr Hickey's "actual employment" with BGC is over. It is quite clear that he does not intend to return to BGC and that he will commence employment with ICAP as soon as he is free to do so (assuming that occurs by 1 November 2016). 11. A second factor is that the reason Mr Hickey's "actual employment" is over is that he has simply walked away from the Contract. Mr Fernon described Mr Hickey's conduct as a "flagrant breach of contract". I do not regard that submission as overstating the matter. 12. Mr Hickey has been engaged in discussions with ICAP since December 2014. There is a dispute as to whether Mr Hickey informed Mr Gunson or the current Executive Managing Director and General Manager at BGC Capital Markets Hong Kong, Mr Mark Webster, of those discussions. Each of Messrs Hickey, Gunson and Webster presented as being certain of their recollection that (in the case of Mr Hickey) he had disclosed his discussions with ICAP and (in the case of Messrs Gunson and Webster) that nothing had been said about this. I think it improbable that Mr Hickey revealed the true position. As each of Messrs Gunson and Webster emphasised, revelation by Mr Hickey of an approach from one of BGC's two competitors, is something which would have alarmed them and they would have recalled. 13. In the result, Mr Hickey purported to resign on one month's notice offering the Award as his principal justification for such short notice. As I have mentioned, that submission was not pressed before me. In effect it was abandoned. I cannot see upon what possible basis Mr Hickey could justify giving only one month's notice of his intention to resign. The proposition that one month's notice was in all the circumstances reasonable was only faintly pressed by Mr Goot. 14. There is no serious suggestion Mr Hickey is thereby suffering hardship. He is being paid his salary by BGC. He can look forward to the prospect of a $500,000 sign on fee within a week of commencing at ICAP (provided he can start by 1 November 2016). 15. But, he is idle and, by reason of the restraint in cl 2.3, unable to obtain any other employment. 16. As a matter of discretion, I would not be prepared to grant BGC an injunction requiring Mr Hickey to comply with his contractual obligations for any longer than was reasonably necessary for the protection of BGC's interests (there being no suggestion in this case that the public interest is affected by what has taken place). 17. BGC's legitimate protectable interest lies in preserving and promoting its connection with its customers. It needs time to replace Mr Hickey at the front line with its customers, including by promoting more junior employees. It also needs time to endeavour to recruit a broker or a number of brokers of similar experience and seniority to Mr Hickey, most if not all of whom are likely to be currently employed by BGC's two competitors (Tullett Prebon and ICAP itself). It also needs time to promote its existing relationship with clients with whom Mr Hickey had dealings and who may be vulnerable to overtures from Mr Hickey (once at ICAP). Mr Goot's cross-examination of Mr Gunson revealed that, unsurprisingly, BGC has already taken steps to achieve these matters. The evidence establishes that these steps can take between 6 and 18 months. 18. A relevant factor is what Mr Hickey agreed to do. He agreed that he would give three months' notice of his intention to resign and that, thereafter, he would be bound by the post-contractual restraint to which I have referred for six months. He also acknowledged, in terms, that these restraints were reasonable (cl 15.4.1). 19. He has reached a very similar agreement with ICAP. 20. Mr Hickey ceased work at BGC on 11 December 2015. He is not going back. The practical question that arises is, for what period after that date does the reasonable protection of BGC's legitimate interest in protecting its customer connection dictate that Mr Hickey continue to be bound by his contractual restraints. My opinion is that I should not grant an injunction which restrains Mr Hickey beyond that date, despite his flagrant conduct. 21. In all the circumstances, the conclusion to which I have come is that BGC's legitimate protectable interest requires that Mr Hickey be restrained from working at ICAP for a period of nine months from the date of cessation of his "actual employment". Nine months reflects the three months' notice that cl 1(c) called for and the six month period referred to in cl 15.2 and represents a period which provides a reasonable opportunity for BGC to take whatever steps are within its power to protect and preserve its client connection. 22. I therefore propose to make an order restraining Mr Hickey from departing from his contractual obligations until 11 September 2016. 23. I invite the parties to confer and agree on the precise form of order that should be made. 24. I will hear the parties as to costs. ********** Amendments 18 February 2016 - Defendant's solicitor's name amended 18 February 2016 - Typographical errors in pars 12, 49 and 112 amended. 19 February 2016 - Typographical error in par 36(c) amended. 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: 19 February 2016