NSW Court of Appeal
enforces confidential information and restraint of trade
covenants against ex-employee
Devine Real Estate, like many professional service
businesses, protected their confidential information and
their goodwill with contractual provisions.
But will they be enforceable when an employee leaves?
The New South Wales Court of Appeal has provided useful
guidance in enforcing these contractual provisions in the
decision of Agha v Devine Real Estate Concord Pty Ltd &
Ors  NSWCA 29 (9 March 2021) (White JA, Payne JA
and McCallum agreeing).
This is my analysis:
What did Roger Agha do?
Mr Agha signed an employment agreement as a salesman with
Devine Real Estate in 2008 at the Concord office. The
agreement provided for protection of confidential
information and contained a post-employment restraint (the
clauses are set out below).
Mr Agha was also a director of, and a shareholder in
Devine Concord, having sold his real estate business at
Concord to Devine Real Estate in 2008. The price was
essentially for the purchase of the rent roll. He signed a
shareholders agreement which contained similar restraints to
those in the employment agreement.
On 8 December 2017, Mr Agha gave notice that he wished to
exit the business – to sell his shares in the business and
to resign his employment.
Earlier that day, between 8:52 am and 10:23 am a person
with the password protected username “Roger Agha” randomly
altered either one, two or three digits to telephone contact
records of 905 clients of Devine Real Estate. The Court
found that Mr Agha was responsible for the sabotage of the
client information, even though there was no eye witness or
CCTV evidence of Mr Agha sitting at his computer screen at
the relevant time.
Note: The sabotage backfired: (a) because it was not
effective – when it was discovered, the correct telephone
numbers were reinstated; and (b) it was a breach of both the
shareholders and the employment agreements.
Before resigning, Mr Agha had arranged for an employee of
Devine Concord to forward client contact lists that
contained contact details for thousands of clients to his
home email. This was another breach of the agreements.
In January 2018, Mr Agha became a sale agent for a
competitor, Belle Property Concord.
The provisions for
provisions for protection of confidential information and
Devine Real Estate used the Real Estate Employers
Federation form of employment contract that included
restraints. These are extracts:
“14. Confidential Information
You agree that You will, at all times both during and
after your employment with the Employer … keep
confidential all Confidential Information …
Confidential Information …. includes
names, addresses (including email addresses), phone
numbers and all other contact information of sellers,
buyers, prospective sellers and buyers, and property
owner (including their employees, contractors and
representatives) on whose behalf a property is managed
by the Employer;
You are not to:
- solicit, attempt to solicit, or accept any
instructions to perform any work from any Client for
the Restraint Period;
- carry on or be engaged, concerned, interested
directly or indirectly … in carrying on any business
for a Competitor for the Restraint Period;
- solicit, attempt to solicit, entice or encourage
any Employer Representative to leave their
engagement with the Employer for the Restraint
The restraint in the Shareholders Agreement operated for
a period of 3 years after the sale of shares and within a
restraint area around the Concord Office, defined by
specified postcodes. Mr Agha was restrained from:
- enticing away an employee or regular customer of or
supplier to Devine; or
- becoming engaged or concerned or interested in any
business in competition with Devine.
primary judge’s findings against Mr Agha (confirmed by the
Court of Appeal)
The findings were that Mr Agha was:
- whilst still a director and employee of Devine
Concord, diverting clients to his proposed new employer,
a competitor (Belle Property);
- breaching the post-employment restraints in the
shareholders’ agreement and his employment agreement
whilst acting as a real estate agent for Belle Property;
- sending confidential client lists to his personal
email address; and
- sabotaging Devine Concord’s client contact lists.
The client contact lists
Were the client lists confidential?
The Court said that that the “client contact lists were
plainly confidential and not part of Mr Agha’s general
know-how. His arranging for the client details to be emailed
to his personal email address … demonstrates that fact. … An
employee is not entitled to remove lists which are the
employer’s property, or to make copies or commit lists to
memory (Weldon & Co v Harbinson  NSWSC 272 at
Were the client lists in the public domain?
The Court said that service in the proceeding of an
Affidavit to which the client lists were confidential
exhibits did not place them in the public domain. Nor did
the tender of those exhibits in open court in circumstances
where the judge had made an order that the specified
evidence was to be treated as confidential on the court file
and not be released without further order from a judge. In
any event, Devine Concord could separately use its
contractual rights contained in the Employment Agreement to
restrain Mr Agha from using or disclosing confidential
The shareholders and
employment agreements restraints
The Court noted that Mr Agha was in breach of the
restraint by finding he had solicited existing clients
within the restraint area whilst working for a competitor
and by seeking to entice one of Devine Concord’s employees
to join the competitor.
The Court found that the restraint was valid - it was
reasonable in the interests of the parties and the public
“given Mr Agha’s seniority and position as a past
“the employer is entitled to protection against
disclosure or use of trade secrets or the use of a
connection built up by the employee with the employer’s
customers. The restraints in the shareholders’ agreement
and the employment agreement are reasonable for the
protection of Devine Concord’s trade connection. The
protection of the trade connection extends to a covenant
against enticement of other employees of Devine Concord
from leaving their employment.”
The Court said that the period of 3 years was reasonable.
Devine had purchased the goodwill of Mr Agha’s business in
2008 at a value calculated on a multiple of 3.66 of the rent
roll annual commission, which “provided a rational
connection with the three-year restraint period in the
The Court said that section 4 of the Restraints of
Trade Act 1976 (NSW) did not apply because the restraint
was not against public policy.
The fact that the employment agreement and shareholders
agreement imposed overlapping restraints was “of no moment
because there are no relevant inconsistencies”. The more
extensive restraint was enforceable.
The Court of Appeal dismissed Mr Agha’s appeal with
costs. The undertakings given by Mr Agha not to use or
disclose, and to destroy the Confidential Information and
against solicitation of clients of Devine Concord in breach
of the restraint of trade were continued.
The taking of accounts and assessment of damages and
compensation payable by Mr Agha was returned to the primary
Mr Combe, an employee of Devine Concord who also left to
join Belle Property, was fortunate not to be bound by the
restraint of trade because no copy of his employment
agreement could be found and the Court refused to imply the
existence of restraints of trade post-employment without an