McMurchy v Employsure Pty Ltd; Kumaran v Employsure Pty Ltd

In *McMurchy v Employsure Pty Ltd; Kumaran v Employsure Pty Ltd*, the New South Wales Court of Appeal considered appeals from decisions concerning restraints of trade and alleged inducement of breach of contract. The primary dispute involved employees who had left their employment with Employsure Pty Ltd to work for a competitor, ELMO Software Ltd. Employsure sought to enforce restraints of trade against the former employees and also alleged that ELMO had induced breaches of contract.

The Court was required to determine whether the exclusive employment covenants within the employees' contracts were reasonable and enforceable restraints of trade. This involved assessing whether Employsure had a protectable interest in its confidential information at the date of the hearing, particularly given the potential for that information to be used to Employsure's detriment by a competitor supplying a competing product. The Court also had to consider whether the language of the restraints justified an inference that the parties contemplated competition at the time of termination, and whether it was necessary to prove the existence of specific competitors at the time the restraints were entered into. Furthermore, the Court examined whether ELMO had induced or encouraged another employee to leave Employsure's employment, and whether that employee had independently decided to leave.

The Court of Appeal, in *McMurchy*, dismissed the appeal, upholding the primary judge's decision regarding the enforceability of the restraints. However, in *Kumaran*, the Court allowed the appeal, setting aside the orders made by the primary judge and dismissing Employsure's summons. The reasoning in *Kumaran* indicated that the primary judge's findings regarding the materiality of encouragement and inducement were not well-founded, and that the employees had independently decided to leave Employsure's employment. The Court reserved the question of costs in *Kumaran*.