A legal case that serves as a warning for both real estate business owners and employees has come to a conclusion, with the High Court dismissing an agent’s final appeal over restraint of trade and confidential company information.
Almost four years ago Devine Real Estate in New South Wales instigated legal proceedings against former employee and shareholder Roger Agha.
The case was initiated on the basis Devine believed when Mr Agha left the company, he had breached the restraint of trade clauses in his REEF employment agreement and also his shareholder agreement, and had copied then pursued the confidential contacts within the company’s CRM.
Devine was initially granted an injunction in 2018, before the case was decided in Devine’s favour in court.
The matter relating to Mr Agha was then upheld in the New South Wales Court of Appeal earlier this year.
Now, the High Court has dismissed a final appeal instigated by Mr Agha’s legal team, on the grounds “the application does not raise a question of law with sufficient prospects of success to warrant the grant of special leave to appeal”.
The High Court decision also awarded costs to Devine Real Estate.
Over the near four years that the case has progressed through the courts, it has revolved around two key themes: whether the REEF employment contract and shareholder contract restraint of trade clauses were binding, and whether the data held in the company’s CRM was considered company property and was therefore confidential.
Today’s High Court dismissal means both the restraint of trade clauses within the employment and shareholder contracts, and the confidential information claim have been upheld.
Speaking to Elite Agent after the decision, Devine Real Estate Director, Steven Devine, expressed a sense of relief to finally have the legal battle behind him.
Mr Devine said he believed it was the only real estate matter of this nature to be referred to the High Court, but noted it provided clarity for the industry moving forward.
He explained the protracted case had incurred significant costs to both parties, but wasn’t just about protecting the interests of his business.
In the case of the CRM, he said it was also about protecting loyal staff, and ensuring their efforts creating, adding to, and building a CRM were not jeopardised by former employees.
“The verdict also gives certainty to buyers and sellers of real estate businesses that there is real, tangible value in goodwill and CI (confidential information) data,” he said.
Meanwhile, he noted the court’s decision sent a message to companies or groups looking to recruit agents that they could be in breach of the Corporations Act if they allowed new employees to bring confidential contacts with them.
“The confidential information in a database is sacrosanct,” he said.
“It is an asset to the business and its loyal employees that needs to be protected.
“Today’s decision reaffirms the only information about a business you should walk out with is what’s in your head.”
Lisa Jemmeson is the Senior Associate and Head of Litigation at Jemmeson & Fisher, who represented Devine.
She explained the case offered a series of lessons for the industry moving forward.
“We are pleased to see that a real estate employer and business owner was able to obtain relief from the courts,” Ms Jemmeson said.
“The importance of giving business efficacy to commercial contracts is of paramount importance.”
Ms Jemmeson stressed, for real estate business owners, the case highlighted the importance obtaining correct legal advice regarding how contracts sit together.
“This arises not only in the context of a shareholder agreement and an employment agreement, but also in relation to an employment agreement where the employee transitions to an independent contractor,” she said.
“Paying for legal advice in the early days is a better option that defending documents through the court process.”
Ms Jemmeson also drew reference to the financial outlay involved in having matters like this addressed in the court, noting the bills soon added up, while the costs also extended beyond the financial.
“Devine have endured time out of and away from the businesses,” she noted.
“All appeals having now been exhausted, the proceedings now go back to the NSW Supreme Court for Mr Devine to call on and quantify his damages and legal costs.”
