SGP Insurance Brokers v Marisa Rockett [2006] NSWSC 117

New South Wales Supreme Court

CITATION : SGP Insurance Brokers v Marisa Rockett [2006] NSWSC 117

HEARING DATE(S) : 7 February 2006

JUDGMENT DATE : 7 February 2006

JUDGMENT OF : Brereton J

EX TEMPORE JUDGMENT DATE : 02/07/2006

DECISION : Paragraph [27]

CATCHWORDS : RESTRAINT OF TRADE - employee restrained from soliciting customers - application for interlocutory injunction - where employee was the point of contact for relevant customers

LEGISLATION CITED : Restraints of Trade Act 1976 (NSW)

CASES CITED : Hellmann Insurance Brokers v Peterson [2003] NSWSC 242

PARTIES : SGP Insurance Brokers Marisa Rockett

FILE NUMBER(S) : SC 1262/06

COUNSEL : Mr R Cheney (P) Mr Grusman (D1)

- 11 - IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

BRERETON J

Tuesday 7 February 2006

1262/06 SGP Insurance Brokers v Marisa Rockett JUDGMENT (ex tempore) 1 HIS HONOUR: The plaintiff SGP Insurance Brokers Pty Limited carries on business as an insurance broker at Campbelltown and, until 1 February 2006, at Bowral. From 25 May 1992 until 5 December 2005 the first defendant Marisa Rockett was employed by SGP as an account manager in its Bowral office. She is now employed by the second defendant OAMPS Insurance Brokers Ltd, a competitor of SGP, particularly in the Illawarra and Southern Highlands. 2 Ms Rockett's terms of employment with SGP were last recorded in a letter dated 31 October 2003, acceptance of which was confirmed by Ms Rockett in Memorandum of Acceptance/Confirmation, dated 30 November 2003, by which she confirmed that the terms and conditions set out in the letter accurately recorded the Agreement between SGP and her, and she continued to accept her position in accordance with those terms and conditions. 3 One of those terms and conditions was entitled Confidentiality, and provided relevantly as follows: During your employment you will have access to information about the Company, its business and clients that is not in the public domain. This Confidential Information includes all information relating to the current or future business interests, methodologies or affairs of the Company, or any person or entity with which they deal or are concerned with, including without limitation all: Names and details of clients, customers, suppliers and agents; Information reasonably regarded as confidential, being information not in the public domain or known to the competitors of the Company or any related Body Corporate; ... You undertake as a condition of employment that you will not use, divulge or communicate any Confidential Information to any person, except as required in the performance of your normal duties and for the benefit of the Company, or with the prior written consent of the Company; ... These obligations continue both during and after termination of your employment with the Company. You acknowledge that the Company has built up Confidential Information over many years and any unauthorised release or disclosure of any Confidential Information by you would seriously damage the Company's business. You acknowledge that this term of your employment is fair and reasonable having regard to the Company's need to protect its business and Confidential Information and that any breach of the above conditions may result in disciplinary action up to and including summary dismissal. 4 The letter of agreement also contained a clause entitled "Restraint on the Post-Employment Activities", which provided: It is a condition of employment that you execute the enclosed Restraint Agreement concerning your post-employment activities. 5 That Restraint Agreement was executed by Ms Rockett as employee on 30 November 2003, and by Mr Murphy on behalf of SGP as employer on 7 November 2003. By it, the employee relevantly agreed as follows: The Employee acknowledges that in view of her position with the Company, she is likely to obtain during her employment confidential information concerning processes and clients. The Employee undertakes that during her Employment and for a period of eighteen (18) months, twelve (12) months or six (6) months after termination of this Agreement, she will not, without prior written consent of the Company either on her own behalf or the behalf of any other person, company or entity, directly or indirectly. (a) solicit or endeavour to solicit away from the Company ...any client with whom the Employee had business dealings in the eighteen (18) months before her employment was terminated; ... The Employee agrees that the restraints imposed by clauses 1 and 2 shall be construed as separate restraints combining each period with each resulting restraint being severable and that the restraints are reasonable to protect the interests of the Employer. 6 The portfolio of SGP clients at Bowral includes some 370 clients and produced annual remuneration to SGP of about $270,000. SGP's client list for the Bowral portfolio records marisar, which I take to be the computer code reference for Ms Rockett, as the "Servicer" in respect of each of the 370 Bowral clients. 7 In about September 2005 SGP commenced negotiations for the sale of its Bowral portfolio. Although the initial sale did not proceed, on 24 January 2006 SGP sold its Bowral portfolio to Macey Insurance Brokers Pty Limited. Under the Acquisition Deed, the completion date for that sale was 1 February 2006. The price is calculated according to a formula which depends on the revenue achieved by the business in the 12 month period following the sale, and has the effect that any loss of clientele in that period causes the reduction of the purchase price to the extent that for each $1,000 of lost revenue the sale price reduces by $1,200. 8 While the initial proposed sale was under consideration and being negotiated, SGP, by letter dated 5 December 2005, informed Ms Rockett of the proposed sale and that she would thereupon be made redundant, but that the proposed buyer was happy to continue with her employment, and asserted that as employment had been arranged with the proposed new owner, no redundancy payment would be made. It continued: This letter is intended to give 3 months notice of sale resulting in termination of your employment. Your employment continues with us until the date of sale. As this may fall short of the 3 month notice required in your Employment Agreement, we will pay you the difference in lieu. ... We look forward to working with you to ensure a smooth transfer thus ensuring a bright future for you and your new employer. 9 On 6 December 2005, Ms Rockett replied that she would not take up employment with the proposed new owner. SGP then responded by letter dated 7 December, relevantly in the following terms: This letter is to confirm that your employment has been terminated and you are no longer employed by Wingecarribee Insurance Brokers. You need not and should not attend the office any more and should not have any further dealings with clients or any other people in within the industry. ... Arrangements need to be made for you to return the various items and to provide satisfaction of compliance with the requirement for deletion of confidential information. ... We look forward to hearing from you to make arrangements for the return of all property relating to the business of the Company, provision of compliance with the requirement of deletion of confidential information. You are to sign a Statutory Declaration to this effect which will then enable payment of your termination and entitlements. 10 On 13 December 2005, Ms Rockett made a Statutory Declaration by which she declared that she had returned to SGP all property, documents and items of or relating to the business of the company in her possession or control, including but not limited to equipment, papers, computers, information, records and documents in whatever form relating in any way to the company or its clients. On the same day, SGP, having previously notified ASIC of concerns that Ms Rockett had retained company documentation after the termination of her employment, wrote again to ASIC advising that it had received the Statutory Declaration and that all outstanding documentation had been returned to its Campbelltown office. 11 It seems that on 16 January 2006 or thereabouts Ms Rockett commenced employment with OAMPS who, as I have said, directly compete with SGP. 12 On or about 23 January, Ms Rockett told another employee of SGP, Ms McGoldrick: The clients are mine. I am going to have as many as possible sign letters of appointment appointing me as their new broker.