Cushman & Wakefield Agency (NSW) Pty Ltd v Hudson [2023] NSWSC 218
In the recent decision of Cushman & Wakefield Agency (NSW) Pty Ltd v Hudson the Supreme Court of New South Wales considered a restraint of trade in respect of an employment agreement.
The plaintiff was a member of an international group of leasing businesses. The defendant was a former employee of the plaintiff.
Commencing in 2016, over time the defendant had been promoted, signing a number of new employment agreements.
The most recent contract included a 3 month notice period and an extended restraint. The defendant gave evidence they did not read the agreement before signing, instead relying on emails exchanged at the time.
In February 2023, the defendant resigned purporting to give 4 weeks notice.
After the defendant left employment, the plaintiff was granted an injunction restraining the defendant from competing with the plaintiff for a period.
The defendant entered into an employment agreement with a competing property business purporting to commence in March 2023.
The defendant’s resignation was a repudiation that the plaintiff could accept and terminate, or otherwise keep on foot. The plaintiff kept the contract on foot.
The “gardening leave” requirements that the plaintiff said remained on foot were indeed restraints of trade.
In early March, the plaintiff got an injunction preventing the defendant from working for their new employer.
The defendant sought to discharge the injunction.
The plaintiff had to show the restraint was reasonably necessary to protect its legitimate interests, and otherwise compliant with the NSW legislation.
The defendant said they were not bound by the 3 month notice period as they had not read the document (legally immaterial where a person has signed a document known by them to include contractual terms).
The plaintiff said the defendant had developed personal relationships, had access to confidential information like tenders and pricing, and may take 12 months to properly replace.
The defendant said head hunting was common among the small industry and the restraint was unnecessary.
The plaintiff established a serious question to be tried due to the defendant’s senior status and personal relationships, that (at least) 3 months might be needed to onboard a replacement for the defendant, and the plaintiff had a legitimate interest in protecting the confidential information the defendant was aware of.
Noting the defendant’s role with the plaintiff there was a risk damages were not an appropriate remedy.
While the defendant might face some financial risk, the plaintiff undertook to continue paying their salary, nor was there evidence that defendant’s sign-on bonus was at risk.
That protected the defendant’s position.
The defendant “was the author of (their) own misfortunes” by entering an arrangement with a new employer in breach of their previous obligations.
The balance of convenience favoured the maintenance of the injunction.
The application to dismiss the injunction failed. The defendant remained bound by it.
This case illustrated the importance of understanding your employment and employer’s rights. If you would like advice in relation to employment law please do not hesitate to reach out to our employment team.
This article was prepared with the assistance of Christie Preston.
If you have any questions or concerns please reach out to Director Stipe Vuleta on 02 6188 3600