In a recent Federal Court ruling, AEI Insurance Group Pty Ltd v Martin (No 4) [2024] FCA 1110, an account manager was ordered to pay $500,000 to his former employer for soliciting clients in breach of his contract. The case underscores the importance of protecting client relationships and highlights the legal consequences of contract breaches.
AEI Insurance Group took action against the manager, who had been the face of its Queensland business, after 21 clients followed him to competitor MA Brokers. Despite obtaining an injunction to stop further solicitation, another 25 clients moved to MA Brokers before the injunction was lifted.
The court relied on circumstantial evidence to determine the manager’s wrongdoing. This included diary notes, client communications, and the manager’s own admissions about contacting clients using his work phone. Efforts to recover evidence were hampered by the suspicious destruction of two of the manager’s phones—one immersed in water and another run over by a lawnmower. Justice Thomas Thawley found that the manager had tampered with evidence and had likely solicited 16 clients directly, playing a role in the migration of 29 more. The judge emphasised the legitimacy of AEI’s interest in protecting its customer connections and determined that a 12-month restraint period was reasonable.
AEI was awarded $500,000 in damages, reflecting the financial loss caused by the breach, while accounting for clients who may have left regardless of solicitation.
Case Reference: AEI Insurance Group Pty Ltd v Martin (No 4) [2024] FCA 1110
At Saines Legal, we are experts in employment law, offering customised advice on how to safeguard your business from contractual breaches and protect your valuable client connections. Whether you need assistance drafting contracts or navigating complex disputes, our team is here to support your business. Contact us today for tailored legal solutions that meet your needs.