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Employment Law – Background

The Supreme Court has rejected a mortgage broker’s argument that the client list he took from his old employer and provided to a competitor was no longer confidential because his old employer posted some of their clients names on Facebook.

Employment Law – Facts

In essence:

  • the mortgage broker worked for Home Loan Experts as an independent contractor, however terminated his agreement with them in November 2016
  • he was still bound by restraint clauses which prevented him from distributing Home Loan Experts confidential information for 10 years and a non-solicit provision which forbade him from engaging in similar business activities for 18 months
  • soon after he started working for competitor, RAMS Financial Group Pty Ltd
  • whilst he was allowed to provide services to family and friends, he was not allowed to lure former clients to RAMS or contact them within the 18-month restriction period
  • the broker downloaded a list containing over 100 of Home Loan Expert’s clients’ names and addresses from their system to his computer and provided it to a RAMS receptionist so she could send Christmas cards
  • however he claimed that client list was not confidential as his old employer had publically posted some of their clients’ names of their Facebook Page

Employment Law – Decision

The NSW Supreme Court:

  • rejected the broker’s argument that the list was not confidential because it was posted on Facebook, as nothing but the clients’ names appeared on the posts and the privacy settings of the client  prevented people from accessing information beyond their Facebook name or making contact
  • was satisfied that the client list “have not entered the public domain so as to be stripped of the necessary quality of confidence”
  • found that the broker had breached his non-compete and confidentiality obligations when he approached and accepted approaches from up to nine Home Loan Expert clients’ whilst working for RAMS
  • determined that the sharing of the client list also breached his agreement with Home Loan Experts as it constituted confidential information because it contained “more intimate” details about clients’ assets and liabilities, and thus remained the intellectual property of Home Loan Experts
  • also found that the broker had breached his equitable duty of confidence by using and retaining its client list and accepting clients’ approaches
  • ordered an injunction restraining the broker from continuing to breach his obligations
  • ordered parties to agree on damages and account for the loss of opportunity that resulted from 8 clients switching to RAMS

The decision is available for you to read through the hyperlink:

Dargan Financial Pty Ltd ATF the Dargan Financial Discretionary Trust (trading under “Home Loan Experts”) v Nassif Isaac [2017] NSWSC 1077 (16 August 2017)

Employment Law – Tips for Employers

Our Matthews Folbigg Workplace Solutions employment law team recommends employers:

  • review this employment law decision
  • seek the assistance of an employment lawyer to understand the impact of this decision
  • consult an employment lawyer if you suspect company confidential information or intellectual property has been misused
  • review employment contracts in response to this employment law decision
  • engage an employment lawyer to draft a written employment agreement with a suitable restraint of trade clause relevant to the position

Employment Law – More Information

Please call the leading employment lawyers in Parramatta, the Matthews Folbigg Workplace Solutions employment law team on 9635-7966 to speak with one of our employment lawyers.