In October 2021, the High Court of Australia ruled on a restraint of trade dispute between a real estate agency at Concord and a former employed real estate agent.
The High Court affirmed the Decision of the Court of Appeal of the Supreme Court of New South Wales in Devine Real Estate Concord Pty Ltd V Agha.
Issues Arising
- Restraining a former employee from contacting customers or from competition is enforceable in certain circumstances.
- The Court will protect the goodwill in a customer list.
- An employee cannot simply commit customer contact details to memory and then use that information to contact customers.
- When a radius restraint and a postcode restraint are enforceable.
Applicability
- Any business where former employees have the potential to entice customers away.
- In particular, professional services businesses.
- In particular, real estate businesses.
Facts of this case
- Employer discovered that employee had sent excel spreadsheets containing thousands of customers and prospects to his personal email address.
- The employee then resigned and set up a new business in the same geographical area under a franchise banner.
- The employee contacted customers of the employer and took steps to list their properties for sale.
- The employer approached the Court for an urgent injunction to restrain the employee from contacting customers and from further prospecting using the employer’s customer list. The Court granted an urgent injunction and then a permanent injunction for 3 years.
Action to take
Consider whether your employment contracts contain enforceable restraint and confidentiality clauses.
If you would like to discuss this further or have the restraint and confidentiality provisions in your employment agreements reviewed by us, please do not hesitate to contact us on 9525 8688 or wmd@wmdlaw.com.au.
