Australia: Court grants injunction despite absence of restraint of trade clause

APT Technology Pty Ltd v Aladesaye [2014] FCA 966

In a significant decision, the Federal Court granted an injunction restraining Matthew Aladesaye, a former employee of APT Technology Pty Ltd (APT), from soliciting or dealing with any of APT's clients, despite the absence of any express restraint of trade clause in the employment contract. The Court also ordered Mr Aladesaye be restrained from directly or indirectly using or disclosing any confidential information or intellectual property belonging to APT, until the final hearing of the matter, or until further order.

Sparke Helmore represented APT in the matter.

Mr Aladesaye was restrained on the basis of the "springboard principle", which prevents a person from using confidential information as a springboard for activities detrimental to the person who owned or made the confidential communication.

Background

APT is a mechanical engineering consultancy operating in Sydney and Adelaide. Matthew Aladesaye was APT's main engineer and the key salesperson for the Adelaide business.

From January 2013 or earlier, Mr Aladesaye set up his own business in direct competition with APT. Until his employment was terminated on 16 June 2014, Mr Aladesaye used and disclosed for his own purposes APT's confidential information, which included the contents of APT's client databases, reports prepared by APT and other business documentation used by APT.

This was in breach of his employment contract, which expressly required him to devote his whole "time, attention and skills" to his APT duties, and not engage in any business activity in competition with APT. His contract also prohibited his use of APT's confidential information for anything other than his role at APT.

What did the court decide?

Justice Foster found that:

• APT was entitled to "the additional protection" of a non-solicitation restraint and that APT was entitled to have its confidential information protected and not used against it by its former employee who owed contractual, equitable and statutory duties to it during the course of and, in some respects, after, the period of employment.
• Mr Aladesaye had a significant head-start over APT in securing the business of its former and existing clients and in servicing them to the detriment of APT.
• Mr Aladesaye used his position as APT's employee and the possessor of APT's confidential information to gain a significant advantage over APT in securing the future business of its existing and former clients.
• An injunction should be granted until January 2015, or until earlier further order, restraining Mr Aladesaye from directly or indirectly canvassing, soliciting or dealing with any of APT's clients.
• A restraint on Mr Aladesaye's dealings with existing and former clients (pending the final hearing of the proceeding), was justified on the basis that it is appropriate relief designed to protect APT from the damage already caused to it and its business, as well as the damage likely to be caused to it and its business as result of Mr Aladaseye's actions.

What's next?

The matter is listed on 8 October to be set down for final hearing, including the hearing for APT's claim to damages.

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