Brokers have made it clear they will take legal action against former employees who they believe may try to poach clients – and court decisions this year have tended to favour the employers.

Two cases in the NSW Supreme Court have led to orders restraining former staff from soliciting or doing business with clients after their previous bosses challenged them, citing terms in employment contracts.

Litigation by Willis against three former executives has ended by agreement, with the court making orders preventing the ex-employees from soliciting or doing business with the company’s clients for set periods.

The Willis case was cited in an action by OAMPS against two of its marine specialists who moved to FP Marine but who have now been prevented from joining their new employer until the end of next March. See other story

Final orders made last Wednesday also prevent Andrew Glover and Simon Gosnell from soliciting OAMPS employees or dealing with specified clients until December 31 next year.

Last month the court agreed to interim injunctions sought by OAMPS Gault Armstrong against Mr Glover and Mr Gosnell.

OAMPS sought the temporary injunctions to stop them moving to FP Marine until its case on the restraint provisions of their employment contracts could be heard.

In his judgement awarding the interim injunction, Justice Henric Nicholas says Mr Glover and Mr Gosnell were the principals of ZIB Gault Armstrong in 2005 when OAMPS acquired the company. He says they signed contracts and the restraint provisions in these would be an issue at a hearing.

FP Marine is a direct competitor to OAMPS’ marine business, which has 500 clients with 1300 policies.

The men were made redundant in March but took paid “gardening leave” until September 9 and were paid out on September 11.

On September 12, FP Marine announced their appointment on its website. On the same day two clients wrote to OAMPS saying they were moving their business to FP Marine, prompting OAMPS to take legal action the next day.

Justice Nicholas says it is “significant” that two clients moved their business the day the appointments were announced.

When OAMPS sought interim orders against the two men they offered – without admission of liability – several undertakings, including not to solicit or engage in business with OAMPS clients that were listed on a confidential schedule provided to the court.

OAMPS rejected some of the undertakings. Justice Nicholas says he had to “balance the hardship that would be suffered by the respective parties if the injunction were or were not to be granted”.

Counsel for Mr Glover and Mr Gosnell argued the undertakings they offered protected OAMPS’ interests.

They would suffer hardship if they could not work for FP Marine, with Mr Glover arguing the marine insurance industry was an extremely small market with “probably no other positions throughout Australia that are similar to the position I held at OAMPS and the position I now hold at FP Marine Risks”.

He said if he could not work in the insurance industry, including marine insurance, he could not earn an income.

Justice Nicholas says that in March and September Mr Glover and Mr Gosnell were reminded of the restraint provisions in their contracts and warned against breaching the provisions.

He says the FP Marine announcement of their appointments was calculated to attract clients, including OAMPS customers.

The judgement says courts will stop somebody working for a competitor without having to prove exactly what their job was or where customers might move.

Justice Nicholas says there were serious questions to be tried regarding the operation, validity and breach of the restraint provisions, and without interim protection OAMPS would be exposed to losing customers and goodwill due to Mr Glover and Mr Gosnell’s “power of attraction” in marine insurance.

“Unless an appropriate order is made, the plaintiff’s goodwill is likely to be endangered and the resultant harm may not be compensable in damages.”

The Willis action ended in September after the company gained interim restraints in June against Michael Griggs, Peter Matthews and Vincent Healy, who left to join Perth-based national broker EBM in March.

In a judgement granting the interim restraints the court noted Willis claimed EBM had not operated in the construction risk sector and was seeking to establish itself there as a major competitor to Willis by using the client connections and information available to Mr Griggs, Mr Matthews and Mr Healy.

The final court orders, made by consent of the parties and without admission, prevent the men from conducting some types of business and make them liable to sequestration of property and jail if they disobey.

They are restrained until December 31 from directly or indirectly soliciting or providing services for four major companies and the Mechanical Contractors Association.

The orders do not stop them serving clients of EBM that were customers in June, regardless of whether they were Willis clients.

Mr Griggs and Mr Matthews are restrained until December 1 from soliciting or providing services for any Willis clients with which they have had dealings.

There are also restraints on dealing with prospective clients they solicited when they worked for Willis.

Mr Healy is restrained until November 30 from “soliciting, interfering with or endeavouring to entice away” from Willis any person or company in Victoria that he did business with when he worked there.