Informax International Pty Ltd v Clarius Group Ltd: Independent Contractors

In a continuing line of cases relating to restraint of trade and independent contractor contracts the full Federal Court has delivered judgment in Informax International Pty Ltd v Clarius Group Ltd  (No 2)[2013] FCAFC 7 (6 February 2013). In this case the full court has allowed interlocutory application by appellants for leave to amend their notice of motion seeking leave to amend their claims for relief even though the interlocutory application was made after the Court had published its reasons in the appeal and cross-appeal (see Informax International Pty Ltd v Clarius Group Ltd [2012] FCAFC 165)

In the earlier proceedings the Court gave the appellants the opportunity to make an interlocutory application in which they sought leave to amend their notice of motion dated 21 April 2011 in order to enable them to claim an order which was within power and the appellants made such application on 26 November 2012. The respondent opposed the application.

Background Facts and Earlier Proceedings

Mrs Menano-Pires was a specialist IT project manager providing services through her company Informax International Pty Ltd to the various clients of the recruitment company Candle (also called Clarius Group Ltd). Candle arranged for Informax to undertake various projects with Woolworths one of its clients. Candle had separate contracts with Informax and with Woolworths, both of which contained restraint clause prohibiting Candle’s exclusion from the relationship by direct contracting.

This contracted arrangement had existed for 15 months approximately and included various renewals of contract. At this point Informax began to contract directly with Woolworths excluding Candle. When Candle became aware of the situation and notified Woolworths that it might be in breach of the restraint clause, Woolworths terminated Informax's engagement. As a result Informax challenged the validity of Candle's restraint clauses, seeking damages for its lost contract. In that case the court decided that Candle could justify some restraint on Informax to protect its relationship with Woolworths but the court considered their evidence insufficient to show the restraint was not more restrictive than needed and refused to enforce the restraint in the contract of Candle's with Informax. With respect to Candle's contract with Woolworths the court found it could not be justified to protect the client connection.

The issues in the current appeal

Where orders were sought by the appellants under the Independent Contractors Act 2006 (Cth) s 16 which amongst other matters allows the court to set aside or vary contracts of service, whether Court on appeal has power to grant leave to amend?

Whether Court would have power to make the orders sought by the appellants and the relevant consideration with respect to discretionary matters including the interests of justice, prejudice to the appellants and to the respondent?

The Full Court's Decision

• That the appellants' application for leave to amend the notice of motion be allowed.

• That the appeal be allowed and the notice of motion remitted to the primary judge for hearing and determination in accordance with Court's reasons.

• That the respondent's cross appeal be dismissed.

Keep up with employment law with TimeBase's Employment Point-in-Time Service whichallows subscribers to view complete histories of legislative provisions, compare changes over time and search for relevant content at any date. Contact TimeBase for a free trial.