Entello Pty Ltd v Firooztash[2016] QDC 50

DISTRICT COURT OF QUEENSLAND

Nature of application

1. [1]
   The applicant (‘Entello’) seeks inter alia certain interim injunctive relief. The case arises from an employment contract. The respondent was a former employee of the applicant. The applicant seeks to enforce restraint of trade covenants, which the applicant asserts were contained in the employment agreement between the parties entered into in 2010.

Background

2. [2]
   The applicant is a financial planning and investment advisory business. In particular, it specialises in providing off-farm investment strategies to primary producers in the rural sector, including the provision of financial education for its clients and potential clients.

3. [3]
   The applicant earns revenue by charging a management fee on funds it invests on behalf of its clients. Such management fees are approximately 1 per cent of the invested sum per annum.

4. [4]
   The applicant employed the respondent in 2004. On 3 August 2015, the respondent indicated that he would resign from the applicant, and the respondent’s date of termination from the applicant was 3 November 2015.

5. [5]
   Prior to his resignation from the applicant, the respondent managed approximately 60 portfolios on behalf of the applicant, with a total portfolio value of approximately $90 million. Accordingly, the respondent’s managed portfolios generated approximately $900,000 per year of recurring income for the applicant.

Contract of employment

6. [6]
   On or about 17 July 2010, the applicant entered into an Employment Agreement with the respondent.

7. [7]
   An addendum to that Employment Agreement was executed on 3 July 2013. That addendum specifically provided that, except as set forth in the addendum, the Employment Agreement is unaffected and shall continue in full force and effect in accordance with its terms. The terms of the addendum did not impact on or vary the terms in the Employment Agreement that are of relevance to this matter.^[1]

8. [8]
   The respondent has attested that a new Employment Agreement and an Indemnity Deed were executed by him on 20 June 2012.^[2]  The Indemnity Deed has been produced and the document confirms the execution date of 20 June 2012.^[3]  He could not produce a copy of any employment agreement signed the same day.  His apparent confusion regarding the issue stems from the Indemnity Deed referring to the Employment Agreement being dated 20 June 2012.  I conclude however that that date was a typographical error and the only Employment Agreement entered into by the respondent was that dated 17 July 2010.  The respondent’s counsel conceded the issue from the bar table for the purposes of this proceeding whilst noting that it is still a disputed question of fact.^[4]

9. [9]
   The alleged Employment Agreement contains the following covenants:

“22. CONFIDENTIALITY

22.1 The Employee acknowledges that as the Employer has invested a lot of time and resources in developing systems and materials, including Confidential Information, he will:

 a) keep confidential all Confidential Information;

 b) not disclose any Confidential Information to any person, except:

  i. as required by law;

  ii with prior written consent from the Employer; or

 iii to the Employer’s employees or advisors in the proper performance of his responsibilities and duties to the Employer, whether under this Agreement, or otherwise;

 c) use his best endeavours at all times to prevent the use or disclosure of any Confidential Information to or by third parties;

 d) maintain proper and secure custody of all Confidential Information; and

 e) not use any Confidential Information, other than in connection with the Employee’s employment on the Employer’s behalf.

 22.2 If Confidential Information lawfully comes into the  public domain, other than as a result of a breach of a term of the Employee’s Employment, or another employee’s or agent’s breach of their duty of confidentiality to the Employer, then to the extent that the Confidential Information is public, and subject to the Employee’s terms of employment, the Employee’s obligation to keep such information confidential ceases.

  22.3 In the event of uncertainty as to whether:

 a) any information is Confidential Information; or

 b) any Confidential Information is lawfully within the public domain;

 such information is deemed to be Confidential Information and not within the public domain, unless the Employer advises the Employee in writing to the contrary.

 22.4 The Employee will immediately deliver all Confidential Information which is in physical form, including but not limited to all copies of computer files (whether on magnetic media or otherwise) to the Employer:

  a) upon the expiration of his employment; or

  b) at any time on our request.

 22.5 The obligations in relation to Confidential Information will:

 a) survive after the Employee cease employment with the Employer, and will survive any termination of this Agreement; and

 b) be enforceable at any time at law or in equity and will continue to the benefit of and be enforceable by us.

 22.6 If the Employee does anything to develop, enhance or upgrade anything included in the Confidential Information during his Employment, this will be done for and on behalf of the Employer, and the Employee’s obligations of confidentiality will apply to the developments, enhancements, or upgrades.

 22.7 The Employee’s obligations under this Agreement in regard to confidentiality will continue to apply after the termination of this Agreement.

 …

25. RESTRAINT OF TRADE

 25.1 The Employee acknowledges that:

  a) As part of his Employment, The Employer will take time and expend money on occasion to train him and develop his skills;

  b) During his Employment he will also have access to the Employer’s Clients, and will gain knowledge of the Employer’s business systems, methods, plans and pricing;

  c) He will also gain access to the Employer’s Confidential Information; and

  d) Damages alone would not be a sufficient remedy for a breach by him of the restraints in this clause. The Employer will be entitled to seek orders restraining him from any breach of these obligations in addition to any orders that a court may make for any other remedy, including the payment of costs, interests and damages.

 25.2 Upon termination of the Employee’s Employment for any reason whatsoever, he will not without the written consent of the Employer:

  a)  entice away from it any employee or contractor of the Employer;

   i. with whom he has dealings on its behalf; or

   ii. in respect of whom he obtained any Confidential Information or personal information as a result of his Employment, for the purposed of offering that person work either as an employee or otherwise.

  b) Contract, offer professional services, market to or undertake professional services for any of the Employer’s Clients that he had dealings with during his Employment;

  c) Solicit any of the Employer’s Clients that he had dealings with during his Employment;

  d) Accept employment from any of the Employer’s Clients that he had dealings with during his Employment.

 25.3 For the purposes of clause 25.2(b), professional services mean services that are the same or similar to the services provided by the Employer to its Clients at the time the Employee’s Employment is terminated.

 25.4 These restrictions will continue for the maximum enforceable period of:

  a) 24 months, or if this is held to be unenforceable then;

  b) 12 months, or if this is held to be unenforceable then;

  c) 6 months;

  d) 3 months;

   from the date of the termination of the Employee’s Employment.

 25.5 If any provisions of these restrains or any part of them is held to be unenforceable, void or voidable for any reason, then that provision or part will be severed and the remainder of the restrain will continue in full force and effect.”

The respondent’s new employment

10. [10]
    Mr Brian Costello, a former owner of the applicant, founded a financial planning services company named Financial Grace Pty Ltd (‘Financial Grace’) in 2012.^[5]

11. [11]
    On 23 October 2015, Mr John Johnson, CEO of the applicant, became aware from a posting on Mr Costello’s Facebook page that the respondent would soon commence employment with Financial Grace.^[6]  Since the respondent’s commencement of employment with Financial Grace immediately followed his termination from the applicant in November 2015, he has been listed as Head of Equities in that organisation, and since 1 February 2016 is also a director and shareholder of Financial Grace.

12. [12]
    Apprehending a potential breach of the respondent’s confidentiality and restraint of trade contractual obligations, on 3 November 2015 Mr Johnson directed the applicant’s then solicitors to write to the respondent to remind him of those obligations. Such correspondence extracted the relevant contractual provisions at length and in detail.^[7]

13. [13]
    In the respondent’s letter of reply on 6 November 2015, the respondent wrote:

“I have not engaged in any conduct in breach of the Contract of Employment.  I have not attempted to solicit Entello clients with whom I have had dealings.  I have not offered professional services to any Entello clients with whom I had dealings.”^[8]

Departure of applicant’s clients

14. [14]
    Since the respondent’s departure on 2 November 2015, of the 60 portfolios that the respondent managed whilst employed by the applicant, the applicant has lost over 30, with a total approximate value of $50 million, and subsequent loss of recurring annual income of $400,000.^[9]

15. [15]
    Many, if not all, of these clients have moved their portfolios to Financial Grace.

16. [16]
    Representatives of the applicant have contacted 16 of those clients who were formerly managed by the respondent when he was employed by the applicant in an attempt to learn the reason for their decision to change financial planners. The result of those enquiries is as follows:

1. Russell Engler: Mr Engler allegedly told Mr Anthony Garnham, Senior Equities Advisor for the applicant, (the respondent’s replacement at Entello) on 30 October 2015 that the previous day the respondent had telephoned him and that he (Mr Engler) had moved his portfolio to Financial Grace.  He also said that “Brian” had called him earlier in the week and that he wanted to “stick with the guys who had been his advisers from the start”.^[10]

2. Yenloora Investments Pty Ltd:  The client advised Mr Garnham on 29 October 2015 that he had met with Brian and had been presented with a strategy that resonated.  He also said that he has had some “ups and downs” with Entello and with the respondent.^[11]

3. Martha Crombie:  This client told Mr Garnham that “she will be going across to Ped”.^[12]

4. JLWJR Pty Ltd:  The client told Mr Garnham that they were transferring to Brian because of “fees” and the fact that they had started with him.^[13]

5. Howard and Carl Hanson:  The client told Mr Garnham on 23 December 2015 that he had changed advisers because he felt a loyalty to Brian and Ped and that the fees would be half that charged by the applicant.^[14]

6. Mr and Mrs Terry:  The clients advised Mr Johnson, CEO of the applicant, that they were committed to moving over to Financial Grace to see what advice Brian would provide, given that their relationship with Entello commenced via attending a course conducted by Brian followed by meetings with him and he had prepared their original plan.^[15]

7. Mr and Mrs Hadley:  The clients advised that the decision to change was a “100% business decision” and not driven by contact from anyone else.  They also did not see much value in the applicant “doubling its fees”.^[16]

8. Mr R and Mrs M Wittwer:  The clients advised on 29 November 2015 that they were moving portfolios as Entello’s fees were too high and their fees would be 50 per cent cheaper at Financial Grace.  They also believed that moving back to the respondent was the “right thing to do” as they had “come on board initially because of him”.^[17]

9. Mr D Wittwer and Mrs R Wittwer:  The client sent an email to the applicant on 20 December 2015 advising that they wished to transfer their services to an unnamed financial services provider.  They did not provide any reasons.  Mr Wittwer is the son of Mr and Mrs R and W Wittwer.^[18]

10. Mr and Mrs Dent:  This client’s portfolio was removed from the applicant’s E-trade facility by another financial planning organisation on or about 7 January 2016.  Mrs Dent is the daughter of Mr and Mrs R and W Wittwer.^[19]

11. Mr D and Mrs A Packer:  This client advised on 2 December 2015 that they were moving “due to relationship with Pedram”.  Mr Packer advised that Pedram had “stressed to him that he wasn’t to say this”.^[20]

12. Mr L and Mrs C Packer:  These clients’ portfolio had been removed from the applicant’s E-trade facility by another unnamed financial planning organisation.  Mr Packer is Mr D Packer’s brother.^[21]

13. Mr and Mrs Woodard:  Mr Woodard advised the applicant on 4 November 2015 that they “had recently been called by Brian and had decided to go back with him, because he had got them started with their investments and they wanted to renew that relationship”.^[22]

14. Mr M Kempton:  This client advised on 11 December 2015 that he wished to move his portfolio due to his friendship with Pedram outside of the work environment.  He emailed: “As Pedram has now moved on I have decided to move with him to the new company he now works for”.^[23]

15. Mr V and Mrs G Packer:  Mrs Packer advised Mr Johnson on 23 February 2016 that due to their relationship with the defendant they wish to move their financial portfolio to Financial Grace.^[24]

16. Mr and Mrs Schlig:  Mr Schlig advised the applicant on 1 March 2016 that he had moved his portfolio to another firm because of cheaper fees and his previous relationship with Pedram.  When asked if “they” had contacted him he advised that he had “reconnected” after a friend had advised him of Financial Grace and that Pedram was working there.^[25]

Submissions

17. [17]
    The applicant has submitted that an order for interlocutory relief is appropriate because the respondent has breached and is continuing to breach clause 25.2 of his Employment Agreement.

18. [18]
    It is submitted that the breaches are constituted by the respondent soliciting some of the applicant’s clients that he had dealings with during his employment with the applicant, and/or he undertaking professional services for clients that he had dealings with during his employment with the applicant. The applicant further submits that this is not a matter where an award for damages would be appropriate and relies on both the factual circumstances and the provision of clause 25.1(d) in that regard.

19. [19]
    The respondent has submitted that the evidence before the court does not support a conclusion that the respondent has breached any clause of his Employment Agreement and that no basis for interlocutory relief has been established, as the applicant has not satisfied the threshold test of demonstrating the existence of a serious question to be tried.

20. [20]
    The respondent further submits that the orders sought are too wide and go further than that which is necessary to protect a legitimate interest.

21. [21]
    Alternatively, the respondent submits that the application ought to be refused:

given the delay in bringing the application taking into account that the applicant’s concerns arose in October 2015;

damages are an adequate remedy;

it will affect third parties; and

it is too wide and uncertain.^[26]

22. [22]
    The respondent also relies on information provided to his solicitor, Mr Leslie Power, by two of the persons who have left Entello, Mr D Packer and Mr Engler. Mr Power has attested to a conversation he had with Mr D Packer on 3 March 2016 and says that Mr Packer told him:

that his brother (Mr J Packer) was now seeking financial planning advice from Financial Grace Pty Ltd;

that the respondent was now working for Financial Grace;

that as a consequence he telephoned Financial Grace and spoke to the respondent;

that he told the respondent he wish to move his business to Financial Grace; and

that the respondent told him:

1. (i)
   he was “not in the game of poaching clients” and that any decision by Mr Packer is entirely up to him and he should consider the matter carefully and not make a rushed decision; and

2. (ii)
   that if he did decide to move his business to Financial Grace that he should tell Entello that he (the respondent) in no way approached Mr Packer or asked him to bring his work to him or Financial Grace;

that he subsequently told Mr John Johnson of Entello that the respondent had not approached him or contacted him to seek his business and that the respondent did not tell him to not tell Mr Johnson that the respondent was the reason for the move to Financial Grace.^[27]

23. [23]
    Mr Power has also attested to a conversation that he had with Mr Russell Engler on 3 March 2016, and says that Mr Engler told him:

that he did not speak to the respondent on or around 30 October 2015;

that he did not advise Mr Garnham that the respondent had telephoned him the previous day (29 October 2015);

that he did not speak with the respondent prior to or about the time he made a decision to move his financial planning arrangements to Financial Grace;

that he had spoken to Brian Costello the day before he spoke to Mr  Garnham; and

that the respondent had never contacted him at any time to seek or offer to provide financial planning services to him.^[28]

24. [24]
    Furthermore, the respondent has attested that he has never solicited any work for either he or Financial Grace from Mr Engler and that he was in Japan on holidays at the time of the alleged conversation between he and Mr Engler.^[29]

25. [25]
    The respondent has also attested that in relation to Mr D Packer, he did receive a telephone call from that ex-client in late November 2015 who advised him that he was considering moving his business to Financial Grace, having heard that the respondent now worked there. The respondent states that he told Mr D Packer “…that was a matter for him and I could not influence or request him to do so.  I told him I did not poach clients.  I asked him, if he chose to retain Financial Grace, to please tell Entello that I had not asked him to do so…”^[30]

The test for interlocutory injunctions

26. [26]
    As to whether an injunction should be granted on an interlocutory or interim basis, the applicant must show that there is a serious question to be tried as to its entitlement to relief; that it is likely to suffer injury for which damages will not be an adequate remedy and that the balance of convenience favours the granting of the injunction.^[31]  The phrase “serious question” is to be understood in the context of the principles explained in Beecham Group Ltd v Bristol Laboratories Pty Ltd,^[32] with the consequence that the requisite strength of the probability of ultimate success depends upon the nature of the rights asserted and the practical consequences likely to flow from the interlocutory orders sort.^[33]

27. [27]
    It is necessary for the court to take into account the principle that evidence is to be weighted according to the proof which it is in the power of one party to produce and in the power in the other to contradict.^[34]

28. [28]
    A court ought order an interlocutory injunction if it is satisfied that there is a serious question to be tried as to the applicant’s entitlement to relief and that the applicant has established a prima facie case in that regard in the sense that if the evidence remains as it is, there is a probability that at the trial of the action the applicant will be held to be entitled to relief and the balance of convenience between the parties favours the making of the order. An injunction will not usually be granted where damages would be an adequate remedy.^[35]

The law on restraint of trade

29. [29]
    The general principle is that a restraint of trade is prima facie invalid, but may be enforced if it affords no more than reasonable protection to the party in whose favour it is imposed and is not injurious to the public.^[36]

30. [30]
    The party who seeks to enforce the restraint has the onus of proving that the restraint is reasonable as between the parties.^[37] The restraint must operate to protect a legitimate interest of the covenantee.  The test is whether the restrictive covenant exceeds what is reasonable and necessary for the protection of the legitimate interest.

31. [31]
    The reasonableness of the restraint is determined at the date of entry into the agreement.^[38]  The issue is whether the agreement was a reasonable one to make at the relevant time, having in mind the best estimate the parties could make for the future.^[39]  The test is whether at the date of the agreement reasonable people in the position of the parties would have expected that performance of the agreement… would be likely to generate significant new good will which the covenantee… could reasonably protect.^[40]

32. [32]
    In employee cases, subject to reasonable restraints to protect an employer’s legitimate interests, an employee should be free to pursue a living in his or her chosen field. The principle interest which can be protected by a restraint against a former employee is the benefit the former employer has of the relationships with its customers.^[41] A restraint upon a former employee is reasonable if it allows a replacement employee to establish a connection with customers and thereby protect the employer’s goodwill.^[42] The courts have found such restraints to be valid where they are reasonably necessary to prevent disclosure of confidential information garnered by the former employee in the course of his employment, or the exploitation of the connection built up by that employee with the former employer’s customers in the course of that employment.

33. [33]
    The breach of the respondent’s contract of employment that is pressed in this application does not relate to general business know how, or his subsequent employment generally as a financial consultant, but instead the use of his personal knowledge of the applicant’s clients obtained during the tenure of his employment. In such circumstances, the courts have held that, subject to limitations of reasonability, clauses restricting former employees from soliciting clients from their former employer to their new employer should be upheld. In Jardin v Metcash Ltd,^[43] the New South Wales Court of Appeal summarised the law as follows (citations removed):

“These statements are not, however, to be understood as requiring that the employee be proved to be in a position to control whether the customer remain or leave with the business.  The employer is entitled to protection against the use of ‘personal knowledge of and influence over’ its customer which the employee might acquire in the course of his or her employment, so as to undermine its customer connections.  It is against the ‘possibility’ of its business connection being adversely affected by the use of that ‘personal knowledge and influence’ that the employer is entitled to be protected.  Lindner v Murdoch’s Garage summarized the relevant principle as follows:

‘Where an employee is in a position which brings him into close and personal contact with the customers of a business in such a way that he may establish personal relations with them of such a character that if he leaves his employment he may be able to take away from his former employer some of his customers and thereby substantially affect the proprietary interest of that employer in the goodwill of his business, a covenant preventing him from accepting employment in a position in which he would be able to use to his own advantage and to the disadvantage of his former employer the knowledge of and intimacy with the customers which  he obtained in the course of his employment should, in the absence of some other element which makes it invalid, be held to be valid.’”

34. [34]
    Indeed courts have held that restraint of trade clauses limited to customers with whom the employee had business dealings are more likely to be valid, such clauses being held to be reasonably necessary to protect customer connections with the employer in circumstances where:

1. (a)
   the employee was in a position to gain the customer’s trust and confidence; and

2. (b)
   the relationship between the employee and customer is such that there is the possibility that the customer’s business may go with the existing employee.^[44]

35. [35]
    In circumstances where, prima facie, the restraint of trade clause is valid, and there is clear evidence of the respondent’s breach of this clause, this limb of the interlocutory injunction test is satisfied.

36. [36]
    Insofar as the issue of “balance of convenience” is concerned it is obvious enough that clients enjoy contractual relations with the company, not the company’s employees. Accordingly, the purpose of restraint of trade clauses are to provide that, following departure of an employee that has a close personal relationship to his or her employer’s clients, the employer is given an opportunity to introduce new employees to such clients and to permit a new relationship to be formed as between them.

37. [37]
    The applicant has submitted that in the financial services industry, an ongoing relationship with a client will have enduring benefit to the financial adviser, in that annual management fees accrue, and continue to accrue. Upon removal of a client’s portfolio from a financial management company, it is submitted that that ongoing source of revenue is permanently lost. Further, any opportunity for referrals from that existing client is similarly lost. I have no difficulty in accepting those submissions. In circumstances where it cannot be determined, with precision, how long any relationship between a financial advice company and the client would have lasted but for the departing employee’s breach, and what referral work would have been realised, damages for breach of conflict are difficult, if not impossible to properly particularise. It is for this reason that the applicant submits that damages are an inadequate remedy for future respondent breaches of his restraint of trade obligations.

38. [38]
    Additionally, the applicant submits that where the interlocutory relief which is sought does not relate to clients that have already departed from the applicant for the respondent, and does not in any other way restrict the respondent’s capacity to work in the financial advice industry for Financial Grace, that the balance of convenience would support the limited interlocutory relief sought by the applicant.

39. [39]
    Assuming that the factual circumstances are found to support the granting of such an order, this submission has much merit.

Does the applicant have a prima facie case?

40. [40]
    In my view, the applicant has failed to establish a prima facie case in relation to the allegation that the respondent has solicited former clients.

41. [41]
    The meaning of solicitation was confirmed by Campbell J in Hellmann Insurance Brokers v Peterson:^[45]

“11. The meaning of ‘solicitation’ is elucidated by a decision of Wood CJ at CL in R v Laws [2000] NSWSC 880; (2000) 50 NSWLR 96, at 98.  His Honour, at [8] recorded the remarks of Spigelman CJ and Hidden J in R v Azzopardi, 1 October 1998, unreported, which in turn approved remarks of Stout CJ in Sweeney v Astle [1923] NZLR 1198 at 1202 which I quote:

‘The word ‘solicit’ is a common English word and it means in a simplified form, ‘to ask’.  In various English dictionaries this simple meaning is given, but other simple words are also used to explain other meanings it possesses, such as ‘to call for’, ‘to make a request’, ‘to petition’, ‘to entreat’, ‘to persuade’, ‘to prefer a request’.’

12. Whether an employee is soliciting a former client is not something which depends upon whether it is the employee who telephones or arranges to meet the former client, or the other way around.  Rather, whether solicitation occurs depends upon the substance of what passes between them once they are in contact with each other.  There is solicitation of a client by a former employee if the former employee in substance conveys the message that the former employee is willing to deal with the client and, by whatever means, encourages the client to do so.”

42. [42]
    In that matter the court was confronted with a similar factual scenario to the present, and the evidence from two clients was that the respondent said when asked what has to be done to get him to act for them that they would need to give him a letter of appointment to DMA (his now employer).^[46]

43. [43]
    Campbell J concluded that such conduct raised the serious question to be tried of whether it amounts to solicitation or not. There was no evidence before the court in that matter as to the reason why the other clients who had moved their business had done so.

44. [44]
    The evidence in that matter is to be contrasted with the evidence in the present matter. Of the 16 clients contacted in this matter, only two provided any information of conversations with the respondent that could arguably amount to solicitation – Mr  D  Packer and Mr Engler.  Yet, both of these men have since denied asserting that which the applicant attributes to them.  Given that there has been no evidence called from either Mr D Packer or Mr Engler (both parties rely on hearsay statements) and that neither Mr Garnham nor Mr Power have been subject to cross-examination, I am in no position to resolve these factual disputes.  In other words, the applicant has failed to persuade me, on balance of probabilities, that the respondent solicited either man.

45. [45]
    The evidence provided as to why the other 14 clients moved their business does not raise the issue of solicitation by the respondent. As to the remaining ex-clients of Entello who have moved their business to Financial Grace, there is inadequate evidence to support a conclusion that the respondent has solicited them in that regard.

46. [46]
    It follows, that the respondent must fail on this ground.

47. [47]
    The second basis for the application is that the respondent has and is undertaking professional services to clients who he had dealings with during his employment at Entello, and is therefore in breach of clause 25.2(b).

48. [48]
    There is no direct evidence on this issue. There is however, an inference reasonably open on the evidence that the respondent is undertaking such services. A number of the ex-clients have indicated that they moved their business to Financial Grace because of their relationship with the respondent – thus providing a basis for the inference that the respondent is undertaking professional services for them. I appreciate however that that might not be the only inference reasonably open. For instance, it might not be unreasonable to infer that Brian Costello is performing the professional financial advice services that each client requires.

49. [49]
    However, it is of particular significance that the respondent has not attested that he has not and will not undertake such professional services. Neither has an affidavit to that effect from Brian Costello been filed. No explanation has been offered for those omissions.

50. [50]
    Those men would know the true position. If such professional work was not being undertaken by the respondent, a denial to that effect would be expected. The absence of such a denial, when considered together with the evidence, allows for only one reasonable inference^[47] – that is that the respondent is undertaking professional services for some people in breach of the provisions of clause 25(2)(b) of the Employment Agreement.

51. [51]
    It follows, in my view, that provided the applicant has proved that the restraint is reasonable as between the parties, there is a serious question to be tried. I am satisfied that the restraint of trade provisions were both necessary and reasonable and designed to protect a legitimate interest of the applicant. I conclude therefore that the provisions were and are valid.

52. [52]
    The respondent has argued that there has been an undue and inexplicable delay between the applicant first suspecting that behaviour constituting such a breach was taking place and the bringing of this action. I do not agree. The evidence is that various clients have moved their business over that period of time and that the accumulation of knowledge gained over that time eventually reached such a level as to cause the applicant to act. That is perfectly understandable and reasonable.

53. [53]
    I also accept, for the reasons submitted, that damages would not be an adequate remedy.

54. [54]
    The respondent has also submitted that the order sought would affect third parties – although it is not clear to me which third parties are being referred to. The applicant seeks an order which specifically excludes those persons who have already moved their business. So, the order sought would have no impact on them. Furthermore, the order sought would not prevent others from moving their business to Financial Grace if they so desired. It would merely prevent the respondent from soliciting such a move or personally undertaking professional services on their behalf.^[48] The respondent has not identified any other third person who might be affected by the order.

55. [55]
    The respondent has also submitted that the injunctive relief sought is “too wide and uncertain”. Again, I do not agree. Its terms are clear and restricted to only those persons who the respondent had dealings with at Entello who have not, to date, moved their business. There is nothing uncertain about it.

56. [56]
    Finally, the respondent has submitted that the balance of convenience does not favour the granting of an interim injunction. Given however, that the duration of the injunction would only be for “six months or the trial of the proceedings whichever occurs earlier” it is my view that the balance of convenience clearly favours the making of the order sought. That is even clearer when one considers the fact that there is no discernible prejudice to the respondent from the making of such an order.

57. [57]
    I will make one variation to the proposed order regarding this issue however. The applicant has sought an order restraining the respondent from certain behaviours in relation to the respondent’s ex-clients whose business still remains at Entello or prospective clients of the applicant… .  There is no evidence before the court that the respondent has had any engagement with “prospective clients of the applicant”.  In fact, that term would seem to be at odds with the stated intention of the applicant in seeking an order that only refers to the balance of the clients whose business still remains with Entello.  The order that I make will reflect my concerns on this issue.

Undertaking as to damages

58. [58]
    Counsel for the applicant has advised the court that an undertaking as to damages will be provided.^[49]

Other relief sought

59. [59]
    The applicant also seeks an order pursuant to r 14(2)(a) of the UCPR that the proceeding continue as if started by a claim. Given that the respondent does not oppose such an order, and taking into account the factual circumstances, it is appropriate to make such an order.

60. [60]
    The applicant also seeks the following orders:

1. That the respondent advise the applicant in writing on or before 11 March 2016 of the names of any person, company or entity who is or was a client of the applicant that the respondent has had contact with since 2 November 2015, including details of the purpose of that contact; and

2. That the respondent advise the applicant in writing on or before 11 March 2016 of the names of any person, company or entity to which he has provided information whether in writing or otherwise, relating to clients or prospective clients of the applicant, and any documents or materials concerning clients or prospective clients of the applicant, that came into the respondent’s possession or control during his employment with the applicant.

61. [61]
    In my view the first of these proposed orders is too wide and the second too ambiguous. I interpret those proposed orders as meaning that the applicant requires the respondent to detail his relevant contact with those persons with whom he has had dealings since 2 November 2015 and to provide a list of any documentation in his possession relating to persons he has had dealings with when employed at Entello since leaving that employ.

62. [62]
    The suggested reason for seeking these rather unusual orders is that it would “permit the expeditious resolution of this matter, including the minimal duration of the interlocutory application applied for”.^[50]

63. [63]
    I note though that the information sought would be disclosable pursuant to the requirements of Chapter 7 of the UCPR. In my view, the “urgency” suggested by the applicant is not of such a nature to cause a departure from the usual processes. The injunctive period is specifically designed to allow the applicant’s replacement at Entello (Mr Garnham) to develop a relationship with those ex-clients of the applicant who still remain loyal to Entello. In that regard I note that Mr Garnham commenced duties at Entello shortly prior to the respondent’s date of resignation. Accordingly, he has already had a period of some four months to promote such relationships. It is the clear and obvious purpose of the relevant provisions of the Employment Agreement to provide a period of time to allow the development of such relationships. I note also that the respondent has attested that he is not aware of having documents or information confidential or otherwise, in his personal possession or under his personal control concerning Entello or its clients or former clients. He has also attested that he is currently continuing to search for any such documents or information (i.e.: emails) and has undertaken to provide a copy of any such documents to the applicant if any are located.^[51]

64. [64]
    The applicant also seeks orders regarding the filing of the Statement of Claim and a Defence. In the circumstances it is appropriate to make such orders, although I will accede to the respondents’ submission and give fixed dates.

65. [65]
    Finally, counsel for each party also made submissions as to costs regarding this application. In my view the question of costs should be reserved until the trial of the matter is resolved. It seems to me that much will depend on what unfolds at the trial and upon its outcome, although, I expect that those would not be the only considerations relevant to the issue.

66. [66]
    It follows that the application, in part, is allowed.

67. [67]
    Orders

1. Upon provision of an undertaking as to damages by the applicant, the respondent be restrained for six (6) months from the date of this order or until the trial of the proceeding, whichever occurs earlier, from:

1. (a)
   using any information, whether in writing or otherwise, relating to clients of the applicant, and any documents or materials concerning clients of the applicant, that came into the respondent’s possession or control during his employment with the applicant, apart from information relating to those former clients of the applicant described in Annexure A to this decision;

2. (b)
   contracting, offering professional services, marketing to or undertaking professional services for any of the applicant’s clients that the respondent had dealings with during his employment with the applicant, apart from those former clients of the applicant described in Annexure A to this decision; and

3. (c)
   soliciting any of the applicant’s clients that he had dealings with during his employment with the applicant, apart from those former clients of the applicant described in Annexure A to this decision.

  For clarity, it is declared that the respondent’s mere attendance at  workshops or seminars co-ordinated by Financial Grace Pty Ltd does               not comprise a breach of orders 1(b) or 1(c) above.

2. Pursuant to r 14(2)(a) of the Uniform Civil Procedure Rules 1999, the proceedings continue as if commenced by a claim.

3. The applicant shall file and serve a Statement of Claim in the proceeding by 4.00pm on 1 April 2016.

4. The respondent shall file and serve a defence by 4.00pm on 29 April 2016.

5. Costs reserved.

ANNEXURE A

LIST OF FORMER CLIENTS OF THE RESPONDENT

1. Terry Family Investments Pty Ltd;

2. Mrs Elizabeth Terry and Mr Simon Terry;

3. MacMillan Family Holdings Pty Ltd;

4. Mr R B Engler;

5. Yenloora Investments Pty Ltd;

6. M J and M J Investments Pty Ltd;

7. Jubilee Pty Ltd;

8. Mr Allan Woodard and Mrs Anne Woodard;

9. Westbourne Nominees Pty Ltd;

10. C and T Hadley Pty Ltd;

11. Mrs Tracey Hadley and Mr Christopher Hadley;

12. Mr Gordon Cuffe and Mrs Lola Cuffe;

13. JLWJR Pty Ltd;

14. Roscomarls Pty Ltd;

15. Mr Ross Wittwer and Mrs Marlene Wittwer;

16. Mr Gordon Childs and Mrs Jane Childs;

17. Packer Holdings Pty Ltd;

18. Mr and Mrs Vince and Gail Packer;

19. Mr Mark Kempton;

20. Mr Howard Hansen and Mr Carl Hansen;

21. Mr David Wittwer and Mrs Robyn Wittwer;

22. The Wilzo Trust;

23. Mr Alexander Moorhouse;

24. Mrs Kathryn Moorehouse;

25. Mr Gavin Dent and Mrs Kerry Dent;

26. Mr Tyrone Pickering and Ms Jane Hudson;

27. Mr and Mrs Schilg; and

28. LC Packer Investment Trust.