Scyne Advisory v Heaney [2024] NSWSC 275

Coffee and a Case Note

“Hey! Stop trying to work for our competitor!”

D was a consultant who, in 2022, left one large firm and joined another. D’s expertise was defence work: [2], [3]

The 2022 role included a 2 year restraint: [4]

The 2022 employer underwent a restructure following a scandal and D was then employed by P, or an entity related to it: [6], [9]

D’s contract with P included a 3 month notice period with a right for P to force D to take that time as “gardening leave” [11] and cascading restraints commencing at 12 months and Australia-wide: [12], [14]

In November 2023 D resigned indicating they planned to work at another firm.

Shortly afterwards P sent D a letter directing D to take gardening leave for 3 months and asserting the restraints: [16], [17]

D acknowledged gardening leave but resisted the restraints: [18]

By the end of D’s gardening leave, neither party had shifted from their position and P commenced proceedings seeking an urgent injunction: [19] - [24]

P had to show there was a “legitimate commercial interest” in enforcing the restraint and that it went no further than necessary to protect it: [28]

P said the restraint would protect P’s legitimate interest in (i) the relationships with P’s clients, or (ii) the confidentiality of P’s confidential information e.g. pricing: [32]

The Court spent some time considering the work done with P and the work to be done at the new entity (noting the evidence was “bedevilled with management jargon” [44]) concluding that the question was one of contractual construction to be set aside for final hearing: [47]

The Court accepted there was a prima facie case in respect of the information D had access to: [48], [49]

The Court noted D had previously accepted a 2 year restraint and so there was a prima facie case for a one year restraint: [51]

Generally, the Court considered P had a prima facie case and turned to the balance of convenience question: [52]

The Court noted D was well paid, had no evidence to show their asset position, had tax liability suggesting significant income in the past, and had their “eyes wide open” when accepting the restraints and then resigning: [53] - [64]

This weighed against D in a balance of convenience argument.

However, P’s delay was pivotal.P only brought the application at the conclusion of D’s gardening leave in February 2024 despite having first raised issues in November, and after various exchanges with D and D’s lawyers during leave: [65]

Delay can be a complete answer to an interlocutory application: [67]

The Court found it would be unreasonable now to restrain D from joining their new employer simply because P “has now belatedly discovered the urgency of the case” without P’s delay having been adequately explained: [80], [81]

This delay tipped “the scale the other way”. P’s application failed. Costs followed the event: [81]