Shire Real Estate Pty Limited v Kersten

The case of Shire Real Estate Pty Limited v Kersten dealt with the enforcement of a restraint of trade clause in an employment contract within the context of real estate agency services. Shire Real Estate, the plaintiff, sought to enforce a restraint against Kersten, the defendant, who was their former employee, from engaging in employment with any business that provided real estate agency services within a certain geographical area for a specified period. The dispute was heard and determined in the Supreme Court of Victoria.

The court was required to consider several legal issues, including the enforceability of the restraint clause in light of the principle that such clauses are only enforceable if they are reasonable and necessary to protect the legitimate business interests of the employer. The court also had to assess the strength of the prima facie case presented by the plaintiff, the adequacy of damages as an alternative remedy to an injunction, and the balance of convenience in deciding whether to grant an interlocutory injunction. Additionally, the court needed to examine the specific nature of the real estate agency services in question and their geographic scope to determine the reasonableness of the restraint.

In delivering the judgment, the court acknowledged that the restraint clause was broad and potentially unreasonable given the nature of the real estate industry. The court found that Shire Real Estate had established a prima facie case for the enforcement of the restraint, given the specific skills and knowledge Kersten possessed that could be utilised by competing businesses. However, the court noted that the adequacy of damages as an alternative remedy played a significant role in the decision. The court found that the balance of convenience favoured granting an interlocutory injunction due to the difficulty in quantifying the precise damages and the potential for irreparable harm if the restraint was not enforced at that stage. Consequently, the court granted an interlocutory injunction pending the final determination of the case.

The final orders included the granting of an interlocutory injunction restraining Kersten from engaging in employment with any business providing real estate agency services within the specified area for a defined period, pending further orders of the court. The case was listed for further hearing to determine the enforceability of the restraint clause in its entirety.