"If interlocutory relief is to be sought, it should always be sought promptly. The court is always entitled to use, as a litmus test of the seriousness of the infringement of the plaintiff's rights which is occurring, how fast the plaintiff reacts to the infringement of its rights. It is… an admission by conduct about how serious the infringement of the plaintiff's rights is" (Capgemini US v Case [2004] NSWSC 674).
The recent decision of Justice Parker in Scyne Advisory Business Services Pty Ltd v Heaney [2024] NSWSC 275 provides an example of the application of this principle and underscores the importance of acting promptly to vindicate your rights.
In Scyne, the plaintiff was part of the corporate group established by Allegro Funds which acquired PwC's government department for $1. The defendant, Ms Heaney, was a previous consulting partner of PwC. She agreed to accept an offer of employment with Scyne and work as a consultant specialising in work for Defence. Part of her contract with Scyne included a restraint of trade clause which precluded Ms Heaney from being employed, for a period of 12 months, by a "Competitive Business" to perform duties or provide services "which are the same or similar" to those which she previously performed for Scyne or where she could "use Confidential Information".
Shortly thereafter, Ms Heaney resigned from Scyne and accepted an offer of employment with Downer Professional Services Pty Ltd. Downer is a competitor to Scyne as it also offers consulting services to Defence.
Scyne quickly sought written undertakings from Ms Heaney that she would not work for Downer or any competitor of Scyne for 12 months, however Ms Heaney refused to provide those undertakings. Over a period of almost four months, Scyne continued asking for the same undertakings, which were repeatedly refused. Ultimately, Scyne commenced proceedings in the NSW Supreme Court seeking urgent orders injuncting Ms Heaney from working for Downer until the issue could be determined at trial.
On the evidence, Justice Parker accepted that:
- Scyne had "reasonable prospects of obtaining restraints which would have some commercial value at trial" by reason of the terms of the employment agreement, Ms Heaney's seniority, and the similarity of her roles with Scyne and Downer; and
- Ms Heaney's claims that she would suffer hardship if her employment with Downer was restrained were "unimpressive".
His Honour concluded that had the relevant factors been limited to the above, he would "be inclined to grant relief".
Ultimately, however, his Honour refused relief because the delay in approaching the court "tip[ped] the scale the other way". His Honour noted that Ms Heaney had refused to give the requested undertakings from 13 December 2023, and had made clear from that time that she was "firmly of the view that commencing employment with Downer will not constitute a Noncompete Breach". This notwithstanding, Scyne continued to write to Ms Heaney over the following months requesting the signed undertakings and threatening litigation, and in each instance Ms Heaney's solicitors responded to confirm that her position had not changed. It was only on 4 March 2024, shortly before Ms Heaney's employment with Downer was due to commence, that Scyne filed proceedings seeking interlocutory injunctive relief.
In those circumstances, his Honour concluded that:
"it would be most unreasonable now to restrain Ms Heaney from continuing with her well-signaled intention to join Downer simply because Scyne has now belatedly discovered the urgency of its case."
Put differently, had Scyne acted more quickly, it would have likely been given the relief it sought: to prevent Ms Heaney from working for Downer until trial.
The decision in Scyne emphasizes the need for prompt and decisive action. This is not to say commercial parties are required to immediately commence court proceedings without first attempting negotiations or non-litigious processes to protect their position. The point, however, is that in the face of a threatened infringement of rights, a commercial party cannot sit on its hands. If it becomes clear that negotiations are not progressing, or the counterparty is unresponsive, continued threats to litigate only serve to weaken the position if urgent court action is required.