Harcourts wins case against agents who went to Bayleys, interim injunction granted

Harcourts agents who left for a rival are now barred from operating in an area from Pukerua Bay to Tawa for three months. Photo / NZME

A Harcourts agency operating in the Paremata and Porirua areas has won an interim injunction against four of its agents who moved to Bayleys, then listed properties which came from leads developed at their old office.

The High Court at Wellington issued the order, saying the agents will not be able to work in the Paremata area for three months and they must also return confidential information to Harcourts.

The area where they are banned from working stretches from Pukerua Bay to Tawa.

Team Group Realty trading as Harcourts Paremata sought the injunction against Martin Cardno, Tanya Davies, Holly Williams, Ralph Kindl and Tony Fitzsimons and it won that for the first four but not the fifth.

Justice Andru Isac issued an interim injunction order against Cardno, Davies, Williams and Kindl from continuing to operate in a specific geographical area, in breach of obligations to Harcourts.

Bayleys only opened a Paremata office in January this year and the agents had resigned from Harcourts in December. Data indicated Harcourts enjoyed the greatest market share of what had been three other major real estate companies operating in the area.

Harcourts contended that client leads were the confidential information of its own business and the respondents were not at liberty to use that information after they had left.

A real estate agent will commonly have a pipeline of work. That begins with client leads via potential vendors who the agent knows are interested in selling.

Agents prospect those leads in the hope of securing a listing agreement, the judge noted.

The first step of usually involves getting a market appraisal. Then they will seek to negotiate a listing agreement, which commonly provides the real estate agency with the exclusive right to market and sell the property for a fixed period, the ruling said.

Ultimately, not all leads will result in a listing and not all listings will result in a sale earning a commission.

Harcourts argued client leads are the confidential information of the business and therefore subject to restraints on use if an agent leaves the agency.

But the respondents’ case was that leads are either personal to an agent, and therefore the property of that agent, or they are agency leads derived from and through Harcourts. The respondents’ position was that agent leads are not Harcourts’ confidential property and they are at liberty to use it on termination of their individual contracts.

The judge was satisfied that Harcourts had established a serious question to be tried about Cardno, Davis, Williams and Kindl’s use of the agency’s confidential information.

Harcourts had also established a failure to comply with restraint of trade provisions by Davis, Williams and Kindl.

Cardno’s use of confidential information derived from his engagement as Harcourts’ agent and the springboard it has provided to both himself and Bayleys was another serious question to be addressed.

“The evidence clearly satisfies me that the first four respondents have used leads obtained while subject to obligations of confidence to Harcourts in generating listings for Bayleys,” the ruling said.

On the fifth person, Fitzsimmons there was evidence he may have shared information but the judge was not satisfied that was a sufficient basis to consider there was an arguable case. So no orders were made against him.

“I am not persuaded that it is appropriate to make the orders sought against Mr Fitzsimons. Should Harcourts consider it has a claim against him arising from an employment relationship, that is a matter it can pursue before the authority,” the judge said, citing the Real Estate Authority.

But rulings were made against the other four.

“I am therefore satisfied that an interim injunction should issue,” the judge decided.

Anne Gibson has been the Herald’s property editor for 24 years, has won many awards, written books and covered property extensively here and overseas.