Federal Court of Australia

Techforce Personnel Pty Ltd v Jaffer [2023] FCA 1674

ORDERS

THE COURT ORDERS THAT:

1.    Paragraph 3 of the orders of the Court of 13 December 2023 be varied to read:

“Until 4.15 (AWST) on 26 April 2024, or further or other order of the Court, or until final determination of the proceedings, whichever is the earlier, the respondent (whether by himself, his employees or agents) must not, without the applicant’s written consent:

(a)    invite, encourage, persuade or attempt to persuade any client, with which the applicant had a service agreement as at 25 October 2023 and in respect of which the respondent had management responsibility in his role as an employee of the applicant, to acquire services of the same or substantially the same kind provided by the applicant to the client from any person other than the applicant; or

(b)    initiate contact with such clients.”

2.    Paragraph 2 of the orders of the Court of 13 December 2023 be varied to read:

“Until further order, any publication or other disclosure of:

(a)    information contained in the affidavit of Justin McNicol (including its annexures) affirmed 11 December 2023; and

(b)    information contained in the affidavit of Tijana Lalovic (including its annexures) sworn 20 December 2023,

is prohibited pursuant to s 37AF of the Federal Court of Australia Act 1976 (Cth) on the ground set out in s 37AG(1)(a), except to the Court and the parties and their legal representatives.”

3.    Paragraph 3 of the applicant’s application for interlocutory relief be reserved and, otherwise, adjourned to a date to be fixed.

4.    The costs of today be reserved.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

FEUTRILL J:

Introduction

1    The applicant (Techforce) is in the business of labour hire and recruitment. The respondent (Mr Jaffer) is a former employee of Techforce who has commenced employment with one of Techforce’s competitors.

2    On 11 December 2023 Techforce filed an originating process seeking injunctive and other relief against Mr Jaffer for alleged breaches of restraint of trade and confidentiality clauses in his contract of employment and contraventions of s 183(1) of the Corporations Act 2001 (Cth). At the same time, Techforce sought interlocutory injunctions to restrain Mr Jaffer from breaches of the restraint of trade and confidentiality clauses.

3    On 13 December 2023, after an urgent interlocutory hearing, I made orders for an interim injunction and adjourned the matter to 21 December 2023. On 21 December 2023, I made orders for an interlocutory injunction to restrain Mr Jaffer from performing acts that could be in breach of the restraint of trade clause.

4    Techforce filed, read and relied upon an affidavit of Justin McNicol affirmed 11 December 2023 and affidavits of Tijana Lalovic sworn 12 December 2023 and 20 December 2023. Techforce also filed a written undertaking as to damages in the usual form. Mr Jaffer filed, read and relied upon an affidavit of his affirmed 19 December 2023.

5    I was satisfied at the time of granting that interim injunction that the affidavit material Techforce had filed in support of the interlocutory injunction demonstrated that there is a serious question to be tried as to whether Mr Jaffer has breached the restraint of trade clause and that the balance of convenience favoured the grant of an interim injunction until, at least, Mr Jaffer had time to consider and respond more completely to the application. On 21 December 2023 I remained satisfied that there is a serious question to be tried and that the balance of convenience favoured the grant of an interlocutory injunction. These are my reasons for making the orders for an interlocutory injunction.

Applicable principles

6    The principles that govern applications for interlocutory injunctions are well-established and need not be restated at any length. The Full Court set out the ‘correct approach’ in Samsung Electronics Co Ltd v Apple Inc [2011] FCAFC 156; (2011) 217 FCR 238 at [52]-[74]. Applicants must first show that they have a prima facie case in the sense of ‘a sufficient likelihood of success to justify in the circumstances the preservation of the status quo pending the trial’: Australian Broadcasting Corporation v O’Neill [2006] HCA 46; (2006) 227 CLR 57 at [65] (Gummow and Hayne JJ, Gleeson CJ and Crennan J agreeing at [19]). This is commonly referred to as a serious question to be tried. What will be sufficient will depend on ‘the nature of the rights [the applicant] asserts and the practical consequences likely to flow from the order he seeks’: Beecham Group Ltd v Bristol Laboratories Pty Ltd [1968] HCA 1; (1968) 118 CLR 618 at 622. Secondly, a party must also demonstrate that the balance of convenience and justice favour the grant of an injunction.

7    These two questions are not entirely distinct. As the Full Court emphasised in Samsung Electronics, the strength of an applicant’s case is a factor to be considered in determining where the balance of convenience lies. Consequently, as Woodward J observed in Bullock v The Federated Furnishing Trades Society of Australasia [1985] FCA 48; (1985) 5 FCR 464 at 472 (Smithers and Sweeney JJ agreeing at 467 and 469 respectively):

… [A]n apparently strong claim may lead a court more readily to grant an injunction when the balance of convenience is fairly even. A more doubtful claim (which nevertheless raises "a serious question to be tried") may still attract interlocutory relief if there is a marked balance of convenience in favour of it. …

8    However, in Australian Broadcasting Corporation v Lenah Game Meats Pty Ltd [2001] HCA 63; (2001) 208 CLR 199, Gleeson CJ observed at [18]:

The extent to which it is necessary, or appropriate, to examine the legal merits of a plaintiff’s claim for final relief, in determining whether to grant an interlocutory injunction, will depend upon the circumstances of the case. There is no inflexible rule. …

9    In Ord Minnett Holdings Pty Ltd v Longmuir [2023] FCA 1262, a case that raised similar issues to this one concerning non-solicitation of clients and confidential information, Jackson J made the following observations with which I respectfully agree and which I gratefully adopt as they are relevant to this application.

89    It is relevant, however, to note two points that are material to this application. The first is that on an interlocutory injunction application, the Court will not conduct a preliminary trial of the action in order to resolve conflicts in the parties' evidence. Therefore the use to which a respondent's evidence can be put may be a limited one. The evidence may be such as to explain away the case put by the applicant, or it may show that in reality there is no such case. But it will not be enough merely to raise a conflict of evidence: see generally Warner-Lambert Company LLC v Apotex Pty Ltd [2014] FCAFC 59 at [72] (Allsop CJ, Jagot and Nicholas JJ), quoting with approval from Shercliff v Engadine Acceptance Corporation Pty Ltd [1978] 1 NSWLR 729 at 734.

90    The second point of particular relevance has already been mentioned: the short period for which the relevant contractual prohibition runs in this case means that the practical effect of interlocutory relief may be to decide the matter once and for all. That is because it appears unlikely that a full trial of the matter will be held and judgment delivered before the three month life of the post contractual restraint expires. As I have said, this means that I considered it appropriate to canvass the evidence in some detail so as to evaluate the strength of Ord Minnett's case for final relief: see Kolback Securities Ltd v Epoch Mining NL (1987) 8 NSWLR 533 at 536 (McLelland J).

91    While these two principles may appear to be in tension, in truth they are not. The nature of the task as described under the heading of the first principle remains the same. It is still an application for interlocutory relief. But the practical consequences of granting or refusing relief in this particular case make it appropriate to go into the evidence in more detail than the Court might otherwise have done.

Mr Jaffer’s contract of employment

10    By a letter of agreement dated 29 January 2021 Techforce and Mr Jaffer made a written contract of employment. It is not entirely clear on the evidence whether Mr Jaffer commenced employment with Techforce in January 2021 or if he was already an employee at that time. In any case, the contract of employment had a proposed start date of 15 February 2021 and stipulated that his employment was subject to a six-month probationary period. The letter containing the terms of the contract of employment was signed by Daniele Graham, Business Manager, SA and Mr Jaffer.

11    Mr Jaffer was employed in the position of ‘Business Development/Recruitment Consultant 360’. His remuneration was $70,000 per annum plus superannuation. However, after the end of the probationary period he was to be paid commission of 33% of billings once the billings exceeded $210,000.

12    As already mentioned, Techforce conducts a labour hire and recruitment business. Techforce has made service agreements with a number of clients in various industries including health care and aged care. It provides the services of its employees (described as candidates) to clients.

13    Business development managers (BDM), in effect, manage service agreements with clients. Once a service agreement is in place the client contacts the BDM to request Techforce to supply workers and the BDM contacts candidates and makes appropriate arrangements for the provision of the workers (candidates) to the client. Techforce employs BDMs to manage clients and their placements. BDMs approve which candidates go to which sites (clients), at what time and approve timesheets for the candidates’ work. BDMs are employed for their sales, business and interpersonal skills in order to build and develop relationships with Techforce’s clients. In the performance of their role, BDMs are provided with access to a wide range of confidential and commercially sensitive information of Techforce.

14    Given the nature of Mr Jaffer’s role and the information to which he was privy, unsurprisingly, his contract of employment contained confidentiality and restraint of trade clauses. The relevant part of the confidentiality clause provides that: ‘Whilst working for Techforce Personnel you will be privy to confidential information such as commercial agreements, company profitability, individual salaries etc. All employees of Techforce will be expected to treat such information with the highest level of confidentiality.’

15    The restraint of trade clause is in the following terms:

You agree not to solicit of contact any Candidate or Client with whom you have been introduced or been privy to information for by the Company, during the period specified below (Restraint Period), without the written consent of the Company.

Consent is at the absolute discretion of the Company, which will not be unreasonably withheld.

Restraint Period means the term of the Contract of Employment and:

a.    6 months after termination, or if found by a court to be void or unenforceable;

b.    3 months after termination, or if found by a court to be void or unenforceable;

c.    1 month after termination.

Each restraint contained in this clause constitutes a separate and enforceable provision, operating concurrently and independently and severable from the other restraints.

You acknowledge that each of the restrictions imposed by this clause:

a.    are reasonable in their extent (as to duration and restrained conduct) having regard to the Company's circumstances and the interests of each party to the Contract of Employment;

b.    extend no further, in any respect, than is reasonably necessary for the maintenance and protection of the business of the Company and its goodwill; and

c.    do not unreasonably restrict your right to carry on your profession or trade.

d.    This clause survives the termination of your employment for any reason.

16    It is fair to say that the restraint of trade clause is not a model of contractual drafting or clarity. I take ‘of’ to mean ‘or’ in the first sentence. Neither ‘Candidate’ nor ‘Client’ is defined or described anywhere in the employment contract. Based on the description of Techforce’s business and Mr Jaffer’s role described in Mr McNicol’s affidavit, it is reasonably arguable that ‘Client’ refers to persons who have made a service agreement with Techforce. That is, a contract to provide the services of Techforce’s employees to that client as and when requested by that client. It is reasonably arguable that ‘Candidate’ refers to employees of Techforce whose services have been provided to one or more clients.

17    It is reasonably arguable that the expression ‘any Candidate or Client with whom you have been introduced or been privy to information for by [Techforce]’ covers, in substance and context, a candidate Mr Jaffer placed with a client while he was Techforce’s employee or a client Mr Jaffer had responsibility for managing while he was Techforce’s employee.

18    The concept of ‘solicitation’ has been the subject of judicial consideration in the context of restraint of trade clauses in a number of authorities. In simple terms, the word ‘solicit’ means ‘to ask’. It has other meanings such as ‘to call for’, ‘to make a request’, ‘to petition’, ‘to entreat’, ‘to persuade’ and ‘to prefer a request’. However, soliciting is not something which depends upon whether it is the former employee who telephones or arranges to meet the 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’: Hellmann Insurance Brokers Pty Ltd v Peterson [2003] NSWSC 242 at [11]-[12]. The person who makes the initial contact is not decisive. Nonetheless, not every positive response to an approach (or contact) by a client is solicitation of that client. The line is crossed where the former employee, in response to an approach, does not merely indicate a willingness to be engaged, but positively encourages the client to engage the former employee: IceTV v Duncan Ross [2007] NSWSC 635 at [44]-[47]. Thus, in context and substance, it is reasonably arguable that ‘solicit or contact’ means ‘an interaction with a candidate or client by which Mr Jaffer conveys a willingness to deal with a candidate or client (whether on his own behalf or on behalf of another person) and encourages that candidate or client to do so’.

19    Mr Jaffer worked with health care or aged care clients. These included:

(a)    Estia Health;

(b)    Uniting Communities;

(c)    Southern Cross Aged Care;

(d)    Para Hills Residential Care (PHRC);

(e)    Saint Hilarion; and

(f)    Calvary Aged Care.

20    Mr Jaffer has worked in the aged care industry for 34 years and has been employed by various recruitment (labour hire) agencies to establish and then operate aged care divisions for those agencies. He deposes that after he commenced employment with Techforce he discussed with Mr Dominic Virgara, its then chief executive officer, the meaning and scope of the restraint of trade clause and in particular the phrase that after the cessation of his employment he should not solicit or contact any client with whom he had been ‘introduced or privy to information for by the Company’. He deposes that they said to each other words to the effect that this phrase did not mean that restraint and confidentiality clauses would apply to clients with whom Mr Jaffer had a relationship prior to joining Techforce and in circumstances where he introduced those clients to Techforce. These clients included Helping Hand, Uniting Communities, Regis, Southern Cross SA/NT, Eldercare, Japara (renamed Calvary), ACH, Estia Health, CCH and Bupa.

21    Although Techforce contests Mr Virgara’s authority to vary the terms of the contract of employment, an addendum to the contract dated 8 June 2021 was signed by Mr Virgara and Ms Graham. Mr Jaffer also signed the addendum on 10 June 2021.

22    The addendum indicated that Mr Jaffer had successfully passed his probation period. It also described his role as ‘Divisional Manager, Nursing & Aged Care Services’. His base salary was increased to $80,000 per annum plus superannuation. His commission was amended to 30% of billings over $240,000. The addendum made no mention of any oral agreement or understanding as to the meaning of the confidentiality and restraint of trade clauses to which Mr Jaffer deposes in his affidavit.

Termination of Mr Jaffer’s employment

23    Mr Jaffer resigned by email dated 25 October 2023 and gave two weeks’ notice. By letter dated 25 October 2023 Techforce confirmed the termination of Mr Jaffer’s employment effective on 26 October 2023 and that he would be paid for two weeks in lieu of serving his notice period.

24    The affidavit material filed in support of the application indicates that Mr Jaffer has taken up employment with Asset Personnel Pty Ltd. He apparently has the role ‘Aged Care/Nursing Services Manager’. Asset Personnel is a competitor of Techforce in the labour hire and recruitment business.

Soliciting or contacting clients

25    On 7 September 2023 Mr Jaffer was in contact with a representative of Asset Personnel. In a message sent to that person he said: ‘My business plan is simple, and that is to gain as much business for Asset Aged Care as possible. A number of clients have already indicated that they wish to engage staff from Asset Aged Care as soon as possible’. He then identified Estia Health, Uniting Communities, Southern Cross, PHRC and Calvary all of which are clients of Techforce with which Mr Jaffer worked while he was Techforce’s employee.

26    On 20 September 2023 Mr Jaffer emailed a copy of a document containing a list of clients and their contact details from his Techforce work email to his personal email address. On the same day he forwarded to his personal email address an email dated 15 November 2021 with the subject line ‘FW: Proposal for Saint Hilarions’. On 28 September 2023 he forwarded to his personal email address an email dated 26 July 2021 with the subject line ‘FW: T&C’s’, which I infer to mean ‘terms and conditions’. The forwarded email was originally sent to recipients with domain names that included ‘@japara.com.au’. I take those recipients to have been representatives of Japara (now Calvary).

27    On 10 October 2023 Mr Jaffer sent a message to a representative of Uniting Communities. Uniting Communities is a client of Techforce with which Mr Jaffer worked while he was Techforce’s employee. It provided the email addresses of Ms Kathleen Martin and Mr Jaffer each with the domain name ‘@assetpersonnel.com.au’. The email commenced ‘Here are our new email addresses’. I infer these email addresses to be Mr Jaffer’s and Ms Martin’s email addresses as employees of Asset Personnel.

28    On 17 October 2023 Mr Jaffer sent an email to Ms Martin, who was evidently an employee of Asset Personnel, with a draft of a pro-forma email to be sent to the email addresses of recipients with the domain names that included ‘@estiahealth.com.au’, ‘@sainthilarion.com.au’, ‘@stbasils.com.au’ and ‘@ach.org.au’. I infer that Mr Jaffer intended that emails be sent to, amongst others, representatives of Estia Health and Saint Hilarion both of which are clients of Techforce with which Mr Jaffer worked while he was Techforce’s employee.

29    Earlier, on 8 October 2023 Mr Jaffer sent a message to a representative of Estia Health in the following terms:

…

I have had a number of conversations with Matthew Ellis previously regarding the price gouging tactics that my superiors decided to inflict upon Estia much to my disgust and opposition. For this reason and others I had decided to leave Techforce on October 23 and promote the use of new agency to Matthew which would be able to continue to provide the current staff that your existing sites and your ED's were very happy with both in regional shortage locations such as Encounter Bay, Strathalbyn[,] Kadina and metro locations [(]Daw Park, Kensington, Burton, Graigmore and others), at much more cost efficient charge rates and also able to provide ancillary staff to Estia both here in South Australia now and in Victoria (particularly Geelong area) in the future.

I am not sure whether Matthew mentioned my conversations with him to you[,] but my relationship with Estia was developing very well and I was also in the process of transitioning some agency staff to your sites without any perm placement fees-Something that Matthew and Management team were very happy with I am hoping to continue the great relationship with Estia and urgently seek a confidential chat with you on my personal phone to provide further details.

…

30    On 19 October 2023 Mr Jaffer sent messages to recipients with domain names ending ‘@estiahealth.com.au’ and ‘@healthcareaustralia.com.au’ in which he said:

…

Matthew and I had agreed to cut off Techforce's access to portal and email alerts this Sunday 22nd Oct. at 11.59pm. We were then going to enter the new arrangement. My personal number is 0448454257 could you please ring me to discuss further as I am having network issues.

…

31    Before 31 October 2023, Techforce had access to more than 15 Estia Health sites through an online portal. Techforce’s access to all but one site has been removed. All shifts of Techforce candidates at that remaining site were cancelled on 31 October 2023. From 31 October 2023 Estia Health ceased placing orders for candidates with Techforce.

32    On 23 October 2023 Ms Martin sent an email to a recipient with the domain ‘@phrc.com.au’ and copied to Mr Jaffer’s new email address at Asset Personnel. The email said: ‘Please find attached our Terms and Insurances, as discussed in your meeting this morning.’ That email attached a Return to Work SA certificate of registration for Asset Personnel, workers’ compensation insurance certificate of currency for Asset Personnel, a pro-forma WHS risk assessment for Asset Personnel, an account set up form for Asset Personnel and a service capabilities document prepared for PHRC by Asset Personnel. That document included charge rates for various levels of nursing staff and shift times. A further email was sent in the same chain in which Ms Martin said: ‘Can you please complete the above forms asap for invoicing’. The forms were described as Asset Personnel Terms and Insurances. There were further emails in the chain on that day ending with an email sent, by mistake, to Mr Jaffer’s Techforce email address. That email said: ‘can you complete these and send back to [D]erek’. PHRC is a client of Techforce with which Mr Jaffer worked while he was Techforce’s employee.

33    Having regard to the affidavit material and communications as a whole, I am satisfied that there is evidence from which an inference may be drawn that Mr Jaffer was in contact with representatives of Estia Health, Uniting Communities, Southern Cross, PHRC, Saint Hilarion and Calvary before and after he formally resigned from his employment with Techforce. Further, before and after his employment was terminated he conveyed a willingness to deal with those clients of Techforce, on behalf of Asset Personnel, and encouraged them to do so.

34    In short, I am satisfied that there is a serious question to be tried as to whether Mr Jaffer is in breach of the restraint of trade clause.

Strength of Techforce’s case

35    Amongst other things, at the time I granted the interim injunction Mr Jaffer made a submission to the effect that he accepted that his employment contract contained a restraint of trade clause, but he contended that he was not in breach of it because Techforce’s clients had contacted him. He contended if they had contacted him ‘then that’s a free market’. Further, Techforce did not have any preferred supplier relationship with its clients as it was a casual supplier. Mr Jaffer appeared to be of the view that the restraint of trade clause had no application if he had not initiated contact with the client. For the reasons already given, it is reasonably arguable that the concept of ‘solicitation’ is wider than initiating contact and includes conveying a willingness to deal and encouraging clients to do so.

36    After granting the interim injunction, Mr Jaffer filed an affidavit in opposition to a continuation of the injunction. As already mentioned, Mr Jaffer deposes to an oral variation to the terms of his employment contract by which he contends that the restraint of trade clause and confidentiality clauses do not apply to all but two of the clients with which Mr Jaffer has been in contact. Otherwise, his affidavit does not purport to deny that he has been in contact with any of the Techforce clients identified in Techforce’s affidavit material. Nor does he deny that he has conveyed a willingness to deal with them and encouraged them to do so. Mr Jaffer has not sought to argue that the restraint of trade clause is invalid or otherwise unenforceable. Subject to the question of its variation by oral agreement, at this point in time, it appears to be accepted that the restraint of trade clause is effective to require him not to contact or solicit the clients he has, in fact, contacted and (or) solicited to engage the services of his current employer. This suggests that, subject to the question of oral variation of Mr Jaffer’s contract of employment, Techforce has a relatively strong case against Mr Jaffer.

37    The Court cannot resolve the question of the contractual terms on contested affidavit evidence on an interlocutory application of this nature. However, it is relevant that Mr Jaffer’s affidavit evidence is of an oral agreement about the meaning of the restraint of trade and confidentiality clauses. Parties’ subjective understanding of the meaning of a written agreement expressed after the agreement was made would not normally be admissible on the question of the construction of the terms of the contract. If it was intended to be an oral variation to the written agreement it is also not obvious that there was any consideration for that variation. Further, as already noted, any variation or clarification of the confidentiality and restraint of trade clauses was not included in the addendum Mr Jaffer later signed. Put another way, on the current state of the affidavit evidence, accepting the truth of the statements in his affidavit, Mr Jaffer has not raised facts that disclosed a particularly cogent defence to the applicant’s case against him.

38    Therefore, on any view, the applicant’s case, on the current state of the affidavit evidence, is relatively strong. That is not to say that in the fullness of time and after completion of all necessary interlocutory steps and evidence has been given at trial that Techforce will succeed and Mr Jaffer’s defence will fail. It is merely an observation based on the untested statements and documents set out in the affidavits filed in support and in opposition to the application for an interlocutory injunction.

Soliciting or contacting candidates

39    At the time I made the order for an interim injunction, I was not satisfied that there was any actual or threatened breach of the restraint of trade clause by reason of the applicant soliciting or contacting any candidate. On the basis of the affidavit material, that remains the case. Accordingly, there is not a serious question to be tried regarding any alleged breach of the restraint of trade clause involving solicitation or contact with any candidate.

Balance of convenience

40    As Jackson J observed in Ord Minett (at [94]) where an applicant moves to enforce a lawful negative stipulation in a contract, the balance of convenience will usually favour the applicant. Therefore, the threshold for the applicant to establish a serious question to be tried such as to warrant the grant of an interlocutory injunction is relatively low.

41    Mr Jaffer deposes that any injunction may:

(a)    affect and impinge on his ability to generate an income;

(b)    interfere with employment and contractual relations already made with third parties by his current employer; and

(c)    impact on the ability of clients of his current employer to discharge their obligation for the care and welfare of their frail and elderly residents over the Christmas and New Year period.

42    Mr Jaffer also deposes that his current employer and he maintain records of the work done and jobs filled for clients and, in effect, it would be relatively easy to calculate whatever ‘profits’ his current employer has derived from his current employer’s dealing with clients. He deposes, for the purposes of Techforce’s undertaking as to damages, it will be likely impossible to calculate any damages to his current employer if an injunction is granted and ultimately Techforce is unsuccessful.

43    Mr Jaffer’s statements are no more than bare assertion, submission, or conclusions. None is supported by any statement of fact or other evidence. There is no evidence upon which the Court could conclude that his assertions have any force. It is not evident that he would not have an income as an employee if restrained from dealing with Techforce’s clients. It is not obvious that restraining Mr Jaffer from so dealing would preclude his current employer from carrying out its contractual obligations under any agreements that his employer may have made with Techforce’s clients. It is also not self-evident that the clients would not be able to care for residents. If there were a difficulty with Mr Jaffer’s current employer meeting its contractual obligations, no doubt, Techforce would be able to do so under its service agreement.

44    I also do not accept that the difficulty of assessing any damages or compensation for Mr Jaffer’s current employer that would be met under Techforce’s undertaking is a reason for refusing to grant an injunction. For the reasons already given, there is no evidence that a restraint on Mr Jaffer would prevent his current employer from continuing to perform any contracts it may have with Techforce’s clients.

45    I take into account the undertaking as to damages that Techforce has given the Court. I also take into account that if an interlocutory injunction were granted until the end of the longest restraint period, it would end on 26 April 2024. It is quite improbable that the originating process will be heard, determined and judgment pronounced before that date. Accordingly, the resolution of the application for an interlocutory injunction will practically determine the substance of the restraint of trade issue. As noted earlier, in those circumstances, it is appropriate to consider in more depth than might otherwise be the case on an interlocutory application, the strength of the applicant’s case: Kolback Securities Limited v Epcoh Mining NL (1987) 8 NSWLR 533 at 536 (McLelland J). That I have done, and I consider the strength of Techforce’s case, albeit inferential, is sufficiently strong to warrant the grant of an interlocutory injunction. In so doing, I also have taken into account that the failure to grant an injunction would have the corresponding effect of practically determining the restraint of trade issue against Techforce. In my assessment, the balance of convenience and the risk of injustice favours Techforce in this case.

Confidentiality clause

46    The issue of whether or not orders for an interlocutory injunction to restrain disclosure or improper use of confidential information was reserved on 21 December 2023 because counsel for Mr Jaffer indicated that Mr Jaffer was willing to consent to such a restraint provided that the information the subject of the restraint was described specifically and with clarity. The parties have indicated that they wish to have an opportunity to confer and provide a minute of proposed consent orders regarding a restraint on disclosure and improper use of confidential information. Nonetheless, as the matter was the subject of argument at the hearings on 13 and 21 December 2023, I consider it would be appropriate to express my views on the merits of the application so as to aid the parties in their conferral.

47    An employer which seeks to restrain a former employee from disclosing or misusing confidential information must identify with specificity, and not merely in global terms, the relevant information and must be able to demonstrate that the information has the necessary quality of confidentiality (and it is not, for example, public knowledge), the information was received by the former employee in such circumstances as to import an obligation of confidence (that is, within equitable principles or the terms of a contract) and there is actual or threatened misuse of that information: Corrs Pavey Whiting and Byrne v Collector of Customs (Vic) [1987] FCA 266; (1987) 14 FCR 434 at 443 (Gummow J). A reason for the requirement of specificity is that an injunction in general terms restraining a former employee from using the employer’s ‘confidential information’, would inappropriately leave, to an application for contempt of court, the determination of whether the particular information was or was not confidential: John Fairfax Publications Pty Limited v Birt [2006] NSWSC 995 at [19].

48    The interlocutory injunction that Techforce has sought in its application as refined in its short minute of orders filed before the hearing on 21 December 2023 does not identify with specificity the relevant ‘confidential information’ that is intended to be the subject of the restraint. Accordingly, I am not prepared to make orders for an interlocutory injunction in the terms Techforce has requested.

49    Nonetheless, the affidavit material filed in support of the application for interlocutory relief indicates that Mr Jaffer sent a copy of a client list containing the names and contact details of a number of Techforce’s clients including those with which Mr Jaffer was in contact before and after his resignation. Having regard to all the other information and Mr Jaffer’s general course of conduct before and after his resignation, I am satisfied that there is a reasonably arguable inferential case to the effect that Mr Jaffer used (or misused) information contained in the client lists for his or his new employer’s advantage. Accordingly, I am satisfied that there is a serious question to be tried that Mr Jaffer has improperly used or may improperly use the information contained in the client list.

50    The affidavit material filed in support of the application for interlocutory relief also indicates that Mr Jaffer sent emails to his personal email address containing information about a proposal for Techforce to supply services to Saint Hilarion and the terms and conditions upon which Techforce supplies services to Calvary. I infer from the email attaching the client list that there were attachments to those emails containing documents of the descriptions in the subject lines of the emails. While there is no direct evidence of disclosure of the information contained in those documents to any third party or of Mr Jaffer improperly using the information contained in them for his or his new employer’s advantage, having regard to all the other information and Mr Jaffer’s general course of conduct before and after his resignation, I am satisfied that Techforce has raised a reasonably arguable inferential case to the effect that Mr Jaffer has or intends disclosing or using (misusing) the information contained in those documents and any other confidential Techforce documents that are in his possession which contain information about the terms and conditions upon which Techforce supplies services to its clients.

51    I was initially attracted to the view that restraining disclosure or use of confidential information was not necessary to the extent that Mr Jaffer is restrained from soliciting business from Techforce’s clients. That is, detrimental use of confidential information was coterminous with encouraging Techforce’s clients to acquire services from a competitor. However, disclosure of confidential information to a third party and use of that information for that third party’s benefit is not captured by restraint on solicitation of clients. Also, the use of confidential information may continue after the contractual restraint on solicitation has ended on 26 April 2024. Therefore, there would be potential utility in restraining disclosure and improper use of confidential information separately from restraining solicitation of clients. Further, having regard to Mr Jaffer’s concession, in effect, that subject to description of the confidential information with appropriate specificity and clarity, a restraint of disclosure and improper use of confidential information would be appropriate, the balance of convenience favours an interlocutory injunction restraining Mr Jaffer from disclosing or improperly using specifically identified confidential information to which he was privy by reason of his employment with Techforce.

Form of orders

52    At the time I made orders for the interim injunction I was concerned to put the order in a form that would describe the substance of the conduct restrained with sufficient clarity for the respondent as the person restrained and to limit the scope of the restraint to that which was strictly necessary for the balance of convenience until Mr Jaffer had an opportunity to consider his position and respond more fulsomely to the application. As to which, see, Ord Minett at [119]-[127]. With the benefit of further submissions, it is appropriate to vary the terms of the injunction so as to align them more closely with the text of the restraint of trade clause and the form of the order sought in the application. For those reasons, the terms of the restraint and injunction were varied as set out in the orders made on 21 December 2023.

53    Regarding confidential information, in the circumstances, I would be prepared to make an order, by consent, along the following lines.

Until final determination of the originating process, or further or other order, whichever is the earlier, the respondent (whether himself, by his employees or agents):

(a)    be restrained from disclosing and must not disclose to any person other than the applicant, its officers, employees or agents; and

(b)    be restrained from using and must not use to gain advantage for himself or someone else or cause a detriment to the applicant,

the names and contact details of clients contained in any client list documents of the applicant the respondent obtained from the applicant or the commercial terms of service agreements with clients contained in any documents of the applicant the respondent obtained from the applicant, except to the extent that information was publicly available at the time of disclosure or use.

54    I was also satisfied that it was appropriate to make an order under s 37AF(1)(b) of the Federal Court of Australia Act 1976 (Cth) (suppression and non-publication order) on the grounds set out in s 37AG(1)(a) (the order is necessary to prevent prejudice to the proper administration of justice) with respect to the information contained in the affidavit of Mr McNicol and second affidavit of Ms Lalovic, as these affidavits contained information that appears to be confidential and of a commercially sensitive nature relating to Techforce’s business and that is the subject of the interlocutory injunctions. The order is interlocutory and is intended to have effect until final determination of the originating process. The necessity for a suppression and non-publication order to continue after the final determination of the originating process will be addressed at the time final judgment is pronounced.

55    The costs of the hearing on 21 December 2023 will be reserved.

Associate:

Dated:    16 January 2024