Sladen Snippet - No Restraint, No Worries

APT Technology Pty Ltd (APT) won a rare injunction in the Federal Court last week, obtaining orders that prevented a former employee from soliciting or dealing with APT clients for five months, even though the employee was not subject to any contractual restraint of trade obligation.

The injunction was obtained by APT satisfying the court that the former employee had:

  • been establishing a business to operate in competition with APT, while he was still employed; and
  • forwarded emails from his APT email account to his personal account that contained APT’s confidential information, notes regarding ATP business opportunities, client reports and APT’s office processes.   

Needless to say, the court was satisfied there was a substantial risk that the employee would use APT’s confidential information for the purposes of his own business to the detriment of APT.  Critically, the employee was responsible for managing APT’s clients in South Australia, therefore, since APT was primarily based in Sydney, the court was able to justify the imposition of a restraint on the basis that the former employee had unfairly obtained a significant head-start over APT in securing its clients in that region (referred to as the ‘springboard principle’). 

The court ordered that:

  • up until 5 February 2015, the former employee be restrained from directly or indirectly canvassing, soliciting or dealing with, counselling, procuring or assisting another person to canvass, solicit or deal with any client of APT; and
  • up until the final hearing of the case, the former employee be restrained from directly or indirectly, using in any way or disclosing to any person, confidential information or intellectual property belonging to APT.

Where no contractual restraint of trade provision applies to an outgoing employee, an employer can often feel as though there is nothing that can be done to prevent or restrict the former employee from soliciting its clients.  However, as the issues in this case highlight, the absence of a restraint clause may not be barrier to an employer seeking an injunction where it can demonstrated that the former employee could be in possession of confidential client information.

For more information or to discuss further, please contact:

Rohan Kux
Senior Associate
03 9611 0107
rkux@sladen.com.au

Sladen Legal

Sladen Legal, 707 Collins Street, Docklands, VIC, 3008