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  • Unreported Judgment

Maclean v Sauermann

 

[2004] QSC 140

 

SUPREME COURT OF QUEENSLAND

 

PARTIES:

FILE NO:

Trial

PROCEEDING:

Application

ORIGINATING COURT:

DELIVERED ON:

14 May 2004

DELIVERED AT:

Brisbane

HEARING DATE:

7 May 2004

JUDGE:

Douglas J

ORDER:

Application dismissed.

CATCHWORDS:

TRADE AND COMMERCE - Trade and Commerce Generally - Restraint of Trade - Restraint by Agreement -  Validity and Reasonableness -  In Particular Cases -  In Contracts for Service -  Other Particular Cases – Covenant not to work for “clients” for a period of two years

EQUITY - Equitable Remedies - Injunctions - Interlocutory Injunctions – Balance of Convenience – Where the balance of convenience favours the respondent not being restrained from performing his current employment

Herbert Morris Pty Ltd v Saxelby [1916] AC 688, referred to

Bridge v Deacons [1984] AC 705, referred to

COUNSEL:

Mr D.H. Katter for the applicant

Mr C.D. Coulsen for the respondent

SOLICITORS:

Barry & Nilsson for the applicant

Porter Davies for the respondent

[1] DOUGLAS J:  This matter originally came before Holmes J on 16 March 2004.  At that stage the parties resolved their dispute by the exchange of mutual undertakings.  The defendant, Mr Sauermann, undertook until trial or further order amongst other things, not to carry out any work for or solicit any work from any clients of the applicant, Mr Maclean, including Damian Winterburn and a number of other named people and companies.  I was told, and a draft order on the file shows, that the undertaking by Mr Sauermann was given only after the words “Navco Property Group” were deleted from the list of entities the subject of the undertaking.  No doubt that is partly because he was then employed by Navco Property Group Pty Ltd (“Navco”), a company controlled by Mr Winterburn.  Mr Maclean alleges that Navco had been a client of his firm, Maclean & Associates (“M & A”) but there is a factual dispute which I cannot resolve at this stage as to whether Navco was a client of M & A. 

[2] Before he commenced work with Navco Mr Sauermann was an employed consultant engineer working with M & A.  Mr Sauermann had also worked for Mr Winterburn before working for M & A  and before Navco was incorporated.  Since leaving his employment with M & A he has been employed to set up an arm of Navco dealing with the engineering side of Navco’s primary activity of developing property. 

[3] His employment contract with M & A provided –

“7.2  TS shall not, during consultancy or at any time after its termination, except in the proper course of duties, use or disclose to any person whatsoever, any confidential information which may have come in to TS possession, in the course of the consultancy with MA relating to the business affairs of MA or any associated activity of MA or any other person firm or company. 

 

7.5  Upon termination of this consultancy, TS shall not carry out work for MA clients for a period of two (2) years.”

[4] Mr Maclean now wishes to obtain an interlocutory injunction wider than the undertakings already given.  He wishes to restrain Mr Sauermann until trial or further order from carrying out any work for Navco and/or Mr Winterburn and/or any company of which Mr Winterburn is a director or shareholder.  He seeks this remedy principally in reliance on cl 7.5 of the contract.

[5] The existing undertaking is sufficient to prevent Mr Sauermann from working for Mr Winterburn so the issue is whether he should be prevented from working for his current employer, Navco, pending trial. 

[6] There is a subsidiary issue raised, whether he breached cl. 7.2’s confidentiality requirements by telling Navco about a property joint venture said to be confidential information learned by him while employed by M & A.  There is no precise description of the alleged confidential information.  I infer that it is information that interests associated with Mr Maclean hold an option to purchase certain land at Kersley Rd, Kenmore for development.  The circumstances said to make it confidential are not described clearly.  In fact Mr Sauermann said that he first told Mr Maclean of the possibilities for the project.  If the information is confidential it has now been disclosed in open court in affidavits which were not the subject of any requests for an order that they be kept confidential.  Nor is there any evidence in respect of the development prospect at Kersley Road that any information disclosed by Mr Sauermann has led or is likely to lead to any damage to Mr Maclean or the interests associated with him.  Accordingly there is very little evidence on which to ground an injunction for any breach of cl. 7.2.

[7] Mr Sauermann resists any order that he refrain from carrying out work for Navco on a number of grounds.  The main ground argued is that cl. 7.5 is invalid as an unreasonable restraint of trade because it seeks to protect Mr Maclean from competition rather than protecting his legitimate commercial interests.

[8] For present purposes it is undesirable to analyse the merits of the argument in detail.  In essence it is that no restraint has ever been upheld if directed only to the prevention of competition by an employee or against the use of the personal skill and knowledge acquired by the employee in the employer’s business; see Herbert Morris Pty Ltd v Saxelby [1916] AC 688, 710.  Here, it is argued, Mr Sauermann has not gone to work for a “rival trader” to Mr Maclean but for an alleged client which is not itself in competition with Mr Maclean.  Navco is a property developer, while Mr Maclean carries on business as a civil engineering consultant. 

[9] There was some disputed evidence from Mr Maclean that Mr Sauermann had been soliciting custom from others of his clients but that dispute is now covered by the undertaking given to Holmes J. 

[10] Mr Sauermann’s employment contract with Navco provides his income.  He has several children to support as well as a substantial mortgage.  It is likely that he will suffer real damage if he were restrained from working for Navco.  Mr Maclean can raise only the possibility that M & A will not receive fees from Navco.  That prospect is itself disputed by Mr Winterburn who says that he wished to employ an engineer in-house in any event to do the work.  The size of the fees potentially available to M & A does not seem to be significant on the evidence, as little as $3,000.00.

[11] Where, as here, I am of the view that there is a reasonable argument that the restraint in cl. 7.5 goes beyond what is necessary to protect the legitimate interests of Mr Maclean’s business as a consulting engineer (see Bridge v Deacons [1984] AC 705, 713-717) by seeking to prevent Mr Sauermann from working in-house for one client which itself operates a different business from M & A, the balance of convenience is in favour of Mr Sauermann.  

[12] The attempt to prevent Mr Sauermann from working for any company of which Mr Winterburn was a director or shareholder was not supportable by reference to cl. 7.5 of the agreement.  It referred to clients of M & A, a different class from companies of which clients were shareholders or directors.  Why, speaking rhetorically, should Mr Sauermann be restrained from working for any company of which Mr Winterburn was a director or shareholder?  In other circumstances, if the restraint were limited to companies controlled by Mr Winterburn, the situation might be different. 

[13] Even if the restraint clause were held to be valid, Mr Maclean’s remedy in damages should be adequate to meet any loss suffered by him. 

[14] Accordingly I dismiss the application.  I shall hear the parties as to costs. 

Close

Editorial Notes

  • Published Case Name:

    Maclean v Sauermann

  • Shortened Case Name:

    Maclean v Sauermann

  • MNC:

    [2004] QSC 140

  • Court:

    QSC

  • Judge(s):

    Douglas J

  • Date:

    14 May 2004

Litigation History

No Litigation History

Appeal Status

No Status