Katerson Pty Ltd v Thambipillay [2016] NSWSC 1226 (26 August 2016)

Last Updated: 1 September 2016

Supreme Court New South Wales

Case Name:	Katerson Pty Ltd v Thambipillay
Medium Neutral Citation:	[2016] NSWSC 1226
Hearing Date(s):	26 August 2016
Date of Orders:	26 August 2016
Decision Date:	26 August 2016
Jurisdiction:	Equity
Before:	McDougall J
Decision:	Extend restraint for a time sufficient to permit parties to mediate, but not otherwise.
Catchwords:	PROCEDURE – interlocutory injunction – restraint of trade – whether restraint against defendant should be extended in time – where parties have agreed to mediation –whether injunction should be extended in scope – no question of principle
Category:	Procedural and other rulings
Parties:	Katerson Pty Ltd (First Plaintiff) Karander Pty Ltd (Second Plaintiff) Votiva Pty Ltd (Third Plaintiff) Property Investors Institute of Australia (PIIA) Pty Ltd (Fourth Defendant) Niro Thambipillay (also known as Nirojan Thambipillay) (First Defendant) Investment Prime Pty Ltd (Second Defendant)
Representation:	Counsel: R Francois (Plaintiffs) K Edwards (Defendants) Solicitors: Brown Wright Stein Lawyers (Plaintiffs) Sydun & Co Solicitors (Defendants)
File Number(s):	2016/221404

JUDGMENT (EX TEMPORE – REVISED 26 AUGUST 2016)

1. HIS HONOUR: The first defendant was an employee of the plaintiffs for some period of time. The plaintiffs say that it is bound by a restraint applicable on, and for the 12 months following termination of, his employment. The restraint includes the following somewhat poorly drafted provision:

5. The Covenantor will not while the Covenantor is retained by the Companies in the Position and or for a period of twelve (12) months following the termination of the Covenantor’s retainer:
...
(b) for any of the purposes specified in sub paragraphs (i) and (ii) below solicit or attempt to solict the business or custom of any of the Companies’ clients and or suppliers with whom the Covenantor had dealings within the period twelve months prior to the termination of the Covenator’s retainer and or any other person whose business or custom the Companies was at the time of the termination of the Covenantor’s retainer: or
(i) cultivating or conducting any business in competition with the Companies’ Business;
(ii) assisting any other person carry on any business in competition with the Companies’ Business;

2. The “Companies” are the plaintiffs. The “Covenantor” is the first defendant. The second defendant is his company, but was not a party to the restraint.
3. When the matter was last before the Court, orders were made enjoining the defendants, on an interlocutory basis and without admissions, both in terms of "the Companies' clients" generally and in respect of specific suppliers to the plaintiffs.
4. Those orders expire today. The plaintiffs seek their extension. The plaintiffs seek also that the injunction, in relation to suppliers, be extended to encompass a company known as QED Risk Services Pty Ltd. The plaintiffs seek extension of the injunctions, so extended as to QED, until further order.
5. The defendants oppose the extension to QED, and oppose also the extension of the injunction until further order.
6. It is common ground that there is to be a mediation before Mr John West of Queen's Counsel, that his available dates finish on about 14 October 2016, and that the parties can get themselves organised for a mediation before Mr West within his range of available dates. In those circumstances, and leaving aside the question of QED, the appropriate course is in principle to extend the injunctions up until and including 17 October 2016, and to list the matter before the Registrar on that date. If the parties are able to resolve their differences, they can relist the matter and have made whatever orders are appropriate. If they cannot, and there is to be a further interlocutory dispute, the Registrar will refer the matter to the List Judge on 17 October.
7. I return to the question of QED. On the face of things, the restraint in respect of suppliers operates only in respect of suppliers with whom the first defendant had dealings within the period of 12 months prior to termination of his employment. The plaintiffs rely on the following words:

“and or any other person whose business or custom the Companies was at the time of the termination of the [first defendant’s] retainer."

8. The difficulty with those words, quite apart from their syntactical and grammatical obscurity, is to give them any meaning which would justify the granting of the interlocutory restraint in respect of QED. On the evidence, QED provides compliance services, including in relation to licensing requirements, for people engaged (as the plaintiffs are and as the first defendant is or wishes to be) in the finance or credit industries. The services that QED provides include, apparently, assistance with obtaining the appropriate licences, and assistance in complying with the conditions attached to any licence that is granted.
9. The plaintiffs’ evidence is that it is possible to apply for the licence direct, without going through an intermediary such as QED. The plaintiffs’ evidence is, also, that there are other companies that provide services similar to those provided by QED. Thus, as a matter of balance of convenience, the plaintiffs submit that extending the restraint to QED would not pose any real hardship to the defendants.
10. That may or may not be so. On the evidence, I am inclined to agree. However, there remains the antecedent problem of finding a legal justification, in the words of cl 5, for the restraint that the plaintiffs seek.
11. The general structure of cl 5(b) is relatively clear. The "Covenantor" - the first defendant - is restrained from soliciting or attempting to solicit the business or custom of the plaintiffs' clients. He is restrained also from soliciting or attempting to solicit the business or custom of suppliers (to the plaintiffs) with whom he had dealings within the period of 12 months prior to termination of his employment. There then follow the mysterious words, set out above, on which the plaintiffs place particular reliance.
12. At a level of some generality, where the question of solicitation both of clients and of suppliers is dealt with expressly in the preceding words of cl 5(b), it is very difficult to understand why there would be a further and general extension of the non-solicitation obligation to clients, or for that matter suppliers, with whom the first defendant had dealings other than within the relevant period.
13. No doubt, the words in question were intended to have some operation. The Court should strive to give meaning to every part of the parties’ bargain, even when it is expressed in language as incomprehensible as the words in question. Nonetheless, the issue is whether I am satisfied, at the level of serious question to be tried, that those words should be given, or more accurately could be given, the meaning for which the plaintiffs contend. I have considerable difficulty in doing so.
14. The plaintiffs are forced to rely on those words because the only evidence, in relation to suppliers with whom the first defendant had dealings within the relevant period, is said to arise "inferentially.” The first defendant's evidence is that he has never had any dealings with QED during the course of his employment with the plaintiffs.
15. Further, it is very difficult to see what legitimate interest of the plaintiffs would be infringed if the first defendant were to use QED to help him obtain the appropriate licence, or to comply with the provisions of that licence. Ms Francois of Counsel, for the plaintiffs, put that there were "confidentiality obligations" in respect of the plaintiffs' clients, or perhaps other persons. Quite frankly, I do not understand how this could arise.
16. The necessity for there to be a serious question to be tried is not considered in a vacuum. As has been made clear from time to time in decisions of binding authority, the strength of the case is to be considered as part of the mix of factors that include the risk of injury and the balance of convenience more generally. In the present case, taking into account the difficulties in the construction case that the plaintiffs seek to mount, and the absence of any real evidence of detriment if there were no restraint, I conclude that it is not appropriate for the injunction to be extended so as to include QED.
17. It follows that I will extend the existing orders, of course upon the plaintiffs continuing the usual undertaking as to damages, up until and including 17 October 2016, and as I have said that I will list the matter before the Registrar on that date.

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