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Harcourts temporarily injuncts Bayleys agents after alleged restraint-of-trade breaches

19 Apr 2024

| Author: Anna Longdill

Application for interim injunction – restraint of trade – protected interest – reasonableness – serious question to be tried – balance of convenience – overall interests of justice

Team Group Realty Ltd t/a Harcourts Paremata v Cardno [2024] NZHC 553 per Isac J.

 

Team Group Realty Ltd operates the Harcourts real estate franchise in the Paremata and Porirua areas of greater Wellington (Harcourts). Tony Fitzsimons was employed as its sales manager. Tanya Davis, Holly Williams, Martin Cardno and Ralph Kindl were independent contractors engaged by Harcourts as individual salespeople.

In 2023, three other major real estate companies were operating in Harcourts’ area. Harcourts enjoyed the greatest market share.

In early December 2023, Fitzsimons resigned from Harcourts. Harcourts ended his employment immediately and paid him out. Within weeks, Davis, Williams, Cardno and Kindl also resigned. None of the agents returned information about leads, appraisals or client contacts to Harcourts.

On 30 January 2024, the Bayleys website added a page for a new “Paremata office”, which was situated 300 metres from Harcourts’ premises. The website advised that Davis, Williams, Cardno and Kindl had become agents, and Fitzsimons the sales manager, of the new Bayleys Paremata office.

Harcourts then wrote to all five individuals seeking undertakings that they would comply with the obligations set out in their contracts, including not to compete in some cases as well as restrictions on the use of confidential information. The individuals advised Harcourts that they would seek legal advice and respond in due course.

In the meantime, Bayleys began listing properties in Harcourts’ market area. Davis, Williams, Cardno and Kindl each listed a property for sale within the first three days of the opening of Bayleys’ office.

The agents had converted leads obtained while working with Harcourts. Most of the properties listed had been the subject of written appraisals completed while the agents were engaged by Harcourts. Two of the agents had also downloaded part of their Harcourts client databases (without the knowledge or consent of Harcourts), before resigning.

Harcourts applied for an interim injunction to restrain the agents from competing with its business in the Paremata and Porirua areas and to require the agents to return and/or destroy any confidential information belonging to Harcourts.

 

Applicable principles: interim injunctions to enforce restraint of trade – does Harcourts have “an interest which in all the circumstances was protected?” – is the restraint of trade reasonable in light of the public interest? – approach of the court where the grant of an interim injunction will practically become a final judgment – is there a serious question to be tried? – balance of convenience – where does the overall interests of justice lie?

Held: The application for an interim injunction was granted.

Harcourts had established a serious question to be tried concerning the use of its confidential information and the respondents’ failure to comply with restraint of trade provisions.  The court was clearly satisfied that granting Harcourts’ application was appropriate.

The agents were restrained from undertaking any business or employment which directly or indirectly competes with Harcourts within the relevant area for three months. The agents were required to return and/or destroy any confidential information belonging to Harcourts and return any other property belonging to Harcourts.

Note: no relief was ordered against the former employee Fitzsimons. The court noted Harcourts could pursue any claim arising from his employment relationship with the Employment Relations Authority.

 

Team Group Realty Ltd t a Harcourts Paremata v Cardno 2024 NZHC 553

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