OAMPS - Enforcing post-employment contractual obligations

Background

In September 2012, two senior insurance brokers from companies OAMPS Gault Armstrong Pty Ltd and OAMPS Insurance Brokers Ltd (OAMPS) were made redundant. OAMPS provided insurance services to the marine industry in Australia and the Asia Pacific region.

Three days after their redundancies took effect, the brokers commenced employment with FP Marine Risks, a direct competitor of OAMPS' marine insurance business in Australia. This was in breach of their post-employment contractual obligations, which prevented them from working with a direct competitor operating in Australia or Noumea for three years.

A press release, which was calculated to attract clients, including existing clients of the employers, was published on the FP Marine website announcing the appointments. On the same day as the release, OAMPS received letters from two clients stating they had appointed FP Marine as their exclusive broker.

Client objectives

OAMPS wanted to protect the companies' goodwill. OAMPS sought interlocutory injunctions to enforce the restraint provisions in the employees' contracts, preventing them from working with a direct competitor and soliciting clients.

Our role

On 19 September 2012, we commenced urgent NSW Supreme Court proceedings on behalf of OAMPS. The proceedings were to enforce post-employment contractual obligations against the two brokers after they commenced employment with FP Marine.

Outcomes

In an interlocutory judgment, Justice Nicholas found it significant that when the brokers' new employment commenced, two of OAMPS' clients appointed FP Marine Risks as their marine insurance brokers. The court found that if interim protection was not provided, OAMPS' goodwill was likely to be endangered.

On 21 November 2012, the Supreme Court of NSW made final orders restraining the two former OAMPS employees from working as insurance brokers for FP Marine Risks, or any other marine insurance broker, until 29 March 2013.

The brokers were ordered by the court to pay $150,000 towards damages suffered by OAMPS as a result of their conduct. The brokers were also ordered to pay an additional amount of $200,000 to OAMPS for its costs.

Court orders were also obtained against a former account manager at OAMPS who worked under the senior brokers. The account manager is restrained from dealing with any OAMPS client as specified in the order, until 22 April 2013.