R T Forsyth Real Estate Pty Ltd v Psaltis

[2021] NSWSC 332

Supreme Court

New South Wales

Medium Neutral Citation:

R T Forsyth Real Estate Pty Ltd v Psaltis [2021] NSWSC 332

Hearing dates:

26 March 2021

Date of orders:

9 April 2021

Decision date:

06 April 2021

Jurisdiction:

Equity - Duty List

Before:

Robb J

Decision:

See pars [41] to [47].

Catchwords:

COMMERCE — Restraint of trade — Enforcement and remedies — Interlocutory injunction – Grant of further specific interlocutory injunction where necessary to uphold existing interlocutory injunction

CONTEMPT — Civil contempt — Breach of interlocutory injunction — Clarity of terms

Category:

Consequential orders

Parties:

RT Forsyth Real Estate Pty Ltd (plaintiff)
Jimmy James Psaltis (defendant)

Representation:

Counsel: V Heath (plaintiff)
W Soon (defendant)

Solicitors: FM Legal Pty Ltd (plaintiff)
Avantro (defendant)

File Number(s):

2021 / 44356

Judgment

1. By notice of motion filed on 23 March 2021, the plaintiff, RT Forsyth Real Estate Pty Ltd, sought the following relief against the defendant, Jimmy James Psaltis:

8.   On the plaintiff's undertaking by [its] legal representative as to damages, until further order:

8.1.   the defendant shall immediately cease and desist from directly or indirectly engaging in providing real estate agency services within a radius of 7.5 km from the plaintiff's office at 236 Penshurst Street Willoughby;

8.2.   by 5 PM on 26 March 2021, the defendant shall terminate the sales agency agreement by which he is acting as listing agent and remove himself as listing agent from property #23 and from all advertisement of that property including without limitation removing his name, image and any contact details from any internet advertising in any form, signboards, brochures or social media in any form;

8.3.   by 5 PM on 26 March 2021, the defendant shall terminate the sales agency agreement by which he is acting as listing agent and remove himself as listing agent from 21a Olympia Road Naremburn and from all advertisement of that property including without limitation removing his name, image and any contact details from any internet advertising in any form, signboards, brochures or social media in any form;

8.4.   that order 10.1 made 18 February 2021 be varied such that the defendant may seek and accept appointment as listing agent on behalf of the business known as Stone Turramurra only for properties located outside the radius of 7.5 km from the plaintiff's office at 236 Penshurst St Willoughby (except by breach of orders 9.6, 9.7, 10.3, 10.4, 10.5 or 10.6 of 18 February 2021).

Costs

9.   The defendant pay the plaintiff's costs.

10.   Alternatively, the costs be the plaintiff's costs in the cause.

2. The orders sought by the plaintiff were for the purpose of supplementary enforcement of order 10.1 made by Rees J on 18 February 2021 following an interlocutory hearing. That order provided:

10.   On the plaintiff by its legal representative giving the usual undertaking as to damages, the defendant

10.1.   until further order or 28 October 2021 (whichever earlier), be restrained from working in or being engaged or interested in the business known as Stone Real Estate Linfield or Stone Real Estate Willoughby or carrying on or being engaged, concerned or interested, directly or indirectly, whether as a shareholder, director, employee, partner, joint venture participant, principal, agent, trustee, unitholder or otherwise, in carrying on any business for any business engaged in providing real estate agency services within a radius of 7.5 km from the plaintiff's office at 236 Penshurst Street Willoughby, except only that the defendant may take such steps as necessary to comply with orders 10.2; …

3. The proceedings arise out of an employment agreement dated 9 July 2014 between the plaintiff and the defendant under which the plaintiff engaged the defendant to provide commission-only services for the plaintiff's real estate business.

4. Clause 19.2 of the employment agreement contained a post-employment restraint on the defendant's commercial activities, including by clause 19.2(b):

Without the Employer's prior consent, from the Termination Date, You are not to:

…

(b)   carry on or be engaged, concerned, interested directly or indirectly whether as a shareholder, director, employee, partner, joint venture participant, principal, agent, trustee, unitholder or otherwise, in carrying on any business for a Competitor for the Restraint Period; …

5. Clause 19.3(a) defined "Restraint Period” as being for alternative periods of nine months, six months, three months or one month. Clause 19.3(c) defined "Competitor" as meaning any business engaged in providing real estate agency services within four alternative radii of the plaintiff's office, being 25, 15, 7.5 or 3 km.

6. It is evident from the terms of order 10.1 made by Rees J that her Honour thought that the balance of convenience justified selecting a time period that ended on 28 October 2021, after the end of the defendant's employment by the plaintiff. Her Honour also selected the alternative of a radius of 7.5 km from the plaintiff's office at 236 Penshurst Street Willoughby.

7. As appeared from the evidence in support of the plaintiff's notice of motion, the defendant subsequently obtained employment at the office of Stone Real Estate at Turramurra. That office is outside the 7.5 km radius.

8. Order 10.1 was made by combining the wording of clause 19.2(b) of the employment agreement and the definition of "Competitor" in clause 19.3(c).

9. The part of order 10.1 that has given rise to argument on the plaintiff's notice of motion is: "… the defendant… be restrained from working in or being engaged or interested in the businesses known as [names stated] or … in carrying on any business for any business engaged in providing real estate agency services within a radius of 7.5 km…" In particular, the perceived difficulty arises from the words "in carrying on any business for any business engaged".

10. The plaintiff's notice of motion was heard in the Duty List on 26 March 2021.

11. It was necessary for the Court to reserve judgment because of the pressure of business in the list on that day.

12. The thrust of the plaintiff's case was that, although the business for which the defendant was working, Stone Real Estate Turramurra, was itself located outside the 7.5 km radius, a substantial proportion of the real estate agency services provided by that office were provided within the 7.5 km radius. Consequently, order 10.1 literally prohibited the defendant from carrying on any business from the Stone Real Estate Turramurra office, wherever those real estate services were provided. The plaintiff went further to say that the defendant himself was engaged in providing real estate services within the 7.5 km radius.

13. There was apparently some difference of opinion between the legal representatives of the plaintiff and the defendant as to what the true meaning and effect of order 10.1 was. I am not sure that I fully understand the nature of the difference of opinion.

14. The purpose of order 8.1 in the notice of motion was effectively to reinforce the effect of order 10.1 by removing any supposed uncertainty and requiring the defendant to immediately desist from providing real estate agency services within the 7.5 km radius.

15. As I understand it, the properties referred to in par 8.2 and 8.3 of the notice of motion are particular properties within the 7.5 km radius as to which the plaintiff says that the evidence shows that, by various means, the defendant is acting as listing agent in breach of order 10.1.

16. In response to an enquiry from the Court as to why the Court should make further interlocutory injunctions to reinforce the effect of order 10.1 as earlier made, instead of leaving the plaintiff to enforce the order by taking contempt of court proceedings against the defendant, the plaintiff submitted that, as the dispute in the present case apparently arose out of a disagreement as to the meaning and effect of order 10.1, it was an appropriate expedient for the Court to make a more specific interlocutory injunction to remove the uncertainty.

17. At the hearing, the legal representative for the defendant did not appear to contest the plaintiff's assertion that the business known as Stone Real Estate Turramurra provided real estate services within the 7.5 km radius, or that some of those services were in fact provided by the defendant himself. The legal representative referred to the fact that the plaintiff's claim has been listed for final hearing before Sackar J in the Expeditions List on 31 May 2021. He said that the defendant contested the validity of the restraint of trade in clause 19 of the employment agreement, and submitted that, if the further interlocutory injunction sought by the plaintiff was made, the practical effect would be to deprive the defendant of the opportunity to earn a living up to the determination of the proceedings at the final hearing. He submitted that the balance of convenience favoured the refusal by the Court of the plaintiff's application, on the basis that the plaintiff would be adequately compensated if it succeeded in the proceedings for an order for damages or an account of profit against the defendant.

18. The affidavit dated 22 March 2021 filed in support of the plaintiff's notice of motion was made by an employee of the plaintiff's solicitor on information and belief from a director of the plaintiff.

19. The evidence appears to establish that for a period after 18 February 2021 the defendant continued to be involved with Stone Real Estate Willoughby, although by par 41 of the affidavit of the plaintiff accepted that the defendant had apparently divested his legal interest in that business.

20. There was evidence that the defendant had acted as the listing agent for a property in Roseville which is within the 7.5 km radius.

21. There was evidence that the defendant was an agent providing real estate services through Stone Real Estate Turramurra.

22. The solicitor performed an analysis by searching the web page for Stone Real Estate Turramurra for sold properties. According to the solicitor, of the 420 houses listed as sold, 178 or 42% were within a 3 km radius of the plaintiff's Willoughby office. Of the sold houses, 328 or 78% were situated within a 7.5 km radius of the plaintiff's Willoughby address. Only 30 of 420 houses, or 7%, were strictly Turramurra listed properties.

23. In his 25 March 2021 affidavit, the defendant explained the steps that he had taken after 18 February 2021 to comply with the order by having his name removed from advertisements or as the listing agent in respect of real estate services provided through Stone Real Estate Willoughby. Some of those efforts were unsuccessful, in the sense that the persons responsible for acting upon them had failed to do so.

24. The defendant said that since 8 March 2021 he has been employed with Stone Real Estate Turramurra which is located outside the radius of 7.5 km from the plaintiff's office in Willoughby.

25. The defendant said that Stone Real Estate has 39 branches across New South Wales and Victoria which have sold the 420 properties referred to in the plaintiff's solicitor's affidavit. 90% of the branches are located outside of the radius of 7.5 km from the plaintiff's office.

26. In respect of one property in Roseville, the defendant admitted that he was the listing agent, but relied upon the fact that Stone Real Estate Turramurra is situated outside the 7.5 km radius.

27. The defendant said that his listing as the sales agent for another property in Roseville, referred to in the plaintiff's evidence, was terminated on 19 February 2021.

28. However, the defendant accepted that since being employed by Stone Real Estate Turramurra, he had listed for sale one property in Roseville and 21A Olympia Road Naremburn.

29. As to the information on various parts of the internet that appeared to show that the defendant continued to engage in activity as a real estate agent within the 7.5 km radius, the defendant said that he does not have control of some information that is posted on the internet, but gave evidence of steps taken by him to try to correct false impressions.

30. The defendant also said that he viewed one of the properties in Roseville for the purpose of his potential purchase of the property which was listed by another real estate agent.

31. The defendant's solicitor affirmed an affidavit that annexed a letter dated 17 March 2021 from the defendant's solicitors to the plaintiff's solicitors that stated the reason why the defendant did not accept that his conduct was in contravention of order 10.1. The reason given was that order 10.1 did not apply to any real estate business that operated from an address outside the 7.5 km radius.

32. Before I commence my consideration of the issues raised by the plaintiff's notice of motion, I should note that par 8.2 referred to "property #23", and that at the hearing the plaintiff submitted to the Court a proposed minute of confidentiality orders that would have had the effect of granting leave to the plaintiff to file a confidential schedule to the notice of motion. The confidential schedule is a single page that states the address of a property in Roseville against the number 23. If made, the effect of the order would be to treat the confidential schedule as being part of the notice of motion without the confidential schedule being uploaded to JusticeLink. Access would not be given to non-parties without an order of a judge of the court on three days' notice to the plaintiff. The orders for confidentiality made on 18 February 2021 would be extended to also apply to the confidential schedule. I note that I have referred above to a number of properties in Roseville in a way that may be confusing by reason of my failure to identify the properties by street numbers. I have taken this course to avoid the possibility of disclosing the information that the plaintiff seeks to keep confidential.

33. Given the limited time that was available at the hearing of the notice of motion, I did not come to understand the reason why the plaintiff wished to keep confidential the precise address of the Roseville property. Ordinarily – and for perfectly good reason – the activities of real estate agents in relation to properties that are listed for sale by them are the least confidential and most public activities that one would usually see.

34. The Court did not have time to make any confidentiality order at the hearing. Notwithstanding the uncertainty as to why the address should be kept confidential, following the publication of this judgment, I will give the plaintiff an opportunity to provide a brief written submission in support of the confidentiality application, together with a conventional form of order to give effect to the application if it succeeds.

35. The outcome of the application depends upon the proper construction of order 10.1. As noted, the order combines two parts of the wording of clause 19 of the employment agreement.

36. It is not necessary on the hearing of the plaintiff's interlocutory application to make a final determination of the meaning and effect of order 10.1. The possibility that there may be proceedings for contempt of court makes it inappropriate for this Court to determine the issue. I only need to be satisfied that the plaintiff has established a sufficient likelihood that order 10.1 and clause 19 of the employment agreement, which underlies order 10.1 (which is essentially the same question), have the meaning contended for by the plaintiff.

37. I am satisfied that the use of the expression "in the businesses known as Stone Real Estate" in order 10.1 is reasonably capable of establishing that businesses was used in the sense of the commercial operations carried on by a particular real estate office. Where, later in order 10.1, it speaks of the defendant being restrained from "carrying on any business for any business engaged in providing real estate agency services within a radius of 7.5 km from the plaintiff's office", the first use of ‘business’ refers to the activities of the defendant and the second use of ‘business’ picks up the activities of the real estate agency for whom the defendant is providing real estate services. With respect to the second use, this is so where that real estate agency itself provides real estate agency services within the 7.5 km radius.

38. If that interpretation of order 10.1 is correct, then the order will prevent the defendant from providing real estate services (even if outside the 7.5 km radius) for any real estate business which, although itself located outside the 7.5 km radius, provides real estate agency services within the 7.5 km radius.

39. On that view of the meaning and effect of order 10.1, by being employed by Stone Real Estate Turramurra, the defendant has arguably breached order 10.1.

40. In my view, it will generally be appropriate for the Court to grant further specific interlocutory injunctions where that is necessary to uphold an existing interlocutory injunction granted by the Court in circumstances where there is some apparent misunderstanding as to the meaning and effect of the injunction.

41. For that reason, it will be appropriate for the Court to make the further interlocutory injunction in par 8.1 of the plaintiff's notice of motion. The direct objective of clause 19 of the employment agreement, and thus order 10.1, is that the defendant himself not provide real estate agency services within the relevant territorial area for a competitor of the plaintiff. The better view is that the defendant is in error if he believes that he can provide real estate services within the 7.5 km radius for a real estate agency whose office is located outside that radius.

42. It is not clear whether the Court should make the interlocutory order sought in par 8.2 of the notice of motion. That order should be made if in fact the defendant is listed as selling agent for that property. There is confusion on the subject because the defendant's evidence was that the property had been sold, but he said in par 31 of his affidavit that the property had been sold on 29 June 2019. That was well before all of the events complained of by the plaintiff.

43. The parties should address this uncertainty by communicating on the issue and it should be relatively straightforward to determine whether the order sought in par 8.2 of the notice of motion should be made.

44. The evidence establishes that the order sought in par 8.3 of the notice of motion should in principle be made.

45. I will also make the orders sought by the plaintiff in par 8.4 of the notice of motion. The effect of that order will be to vary order 10.1 made on 18 February 2021 in a way that is beneficial to the defendant. As noted, order 10.1, on the construction contended for by the plaintiff, would prevent the defendant providing real estate services outside the 7.5 km radius for a real estate office located outside the radius in every case where that real estate office itself provided real estate services within the 7.5 km radius. The effect of the order in par 8.4 of the notice of motion will be to permit the defendant providing real estate services for Stone Real Estate Turramurra provided the defendant's own activity is in respect of properties outside the 7.5 km radius.

46. It is now obviously too late for the Court to make interlocutory injunctions that take effect from 5 PM on 26 March 2021. The parties should confer and submit appropriate short minutes of order to my Associate. The defendant should be given a reasonable, but short, time to do whatever it is that will be required of him to comply with the orders to be made.

47. The appropriate costs order is that the cost of the notice of motion be the plaintiff's costs in the cause.

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Decision last updated: 15 April 2021