The Federal Court has discharged restraint of trade injunctions that were put in place after AEI Insurance Group became concerned about the actions of a broker who left to join a rival firm. 

Account manager Craig Martin gave notice of his resignation on August 29 and subsequently advised he would be joining MA Insurance Brokers. By early November AEI became aware that a substantial number of clients had withdrawn their business from the firm and engaged MA Insurance Brokers.   

AEI on November 7 lodged a court filing around allegations that Mr Martin had engaged in conduct prohibited by restraint of trade clauses in a contract that bound him for up to 12 months after leaving his employment at AEI, and sought rulings to enforce the clauses. 

An injunction was granted on November 9, and varied on November 30, for a period extending to September 2 this year. The court heard an application on July 31 from Mr Martin to have it discharged, with the application granted by Justice Robert Bromwich on August 1. 

Justice Bromwich says it’s not in dispute that Mr Martin had dealings with customers or clients at AEI in his last 12 months who ended up shifting their business to MA Brokers. The issues in contention over his actions and what he was permitted to do will be finally determined by the trial judge. 

But for the time being, in the injunctions matter, he concluded that “perhaps with the qualification that a customer or client of AEI Insurance did not become a customer or client of MA Brokers by reason of any direct or indirect conduct on the part of Mr Martin”, he is not constrained in performing work for such a customer or client of MA Brokers after the change in broker has taken place. 

Justice Bromwich says Mr Martin has given evidence on his relationship with 40 former customers or clients of AEI Insurance who had appointed MA Brokers after he resigned, noting long-standing personal knowledge of the principals or senior officers with many of the companies. 

“He deposes to not informing any of them that he was commencing or had commenced employment with MA Brokers,” the decision says. “Further, there is no direct or even strongly inferential evidence that Mr Martin has been using or disclosing confidential information.” 

Justice Bromwich says he is satisfied that “Mr Martin has established by his evidence that there is a real and distinct possibility, and perhaps even a probability that he has not in fact done anything in breach” of his contract.  

“I consider that the balance of convenience favours Mr Martin rather than AEI Insurance. It therefore favours discharge of the injunctions, rather than their continuation,” he says. 

The decision is available here.