Two agencies ended up in court following allegations that one illegally poached property management business from the other.
Sydney firm Properties Northside, which trades as Raine & Horne Manly, took legal action against nearby agency Coastview Real Estate in August 2013.
The dispute arose because Coastview’s principal, Geoffrey John Pickering, was previously a shareholder in Properties Northside and had agreed to certain restraints when selling his stake to his two business partners, Marlena Jane Sait and Tobias Hutton.
As part of the August 2011 deal, Mr Pickering agreed that in the next five years he would not establish a rival business within five kilometres of Properties Northside or poach any clients or staff, according to the Supreme Court of NSW.
Mr Pickering remained at Properties Northside as an employee, but then in June 2013 he opened Coastview at an address 4.7 kilometres away, according to the court.
Properties Northside initiated legal action in August 2013, but that was settled eight days later by a new agreement that allowed Coastview to continue trading at the same address.
Mr Pickering agreed to pay Properties Northside $20,000 as well as referral fees and a share of his commission on certain local sales made between April 2013 and April 2016.
He also agreed not to poach certain clients or properties between April 2013 and April 2018.
However, in October 2014, Properties Northside launched new legal proceedings, alleging that Mr Pickering and Coastview had made two unauthorised sales and one unauthorised property management deal.
Properties Northside asked for $25,882 compensation for the property management deal, based on fees that Coastview had earned and was forecast to earn.
The court ruled that Mr Pickering and Coastview breached the August 2013 agreement and that Properties Northside was entitled to damages.
However, it only awarded $9,000 because it was not certain that the landlord would have given his business to Properties Northside if he had known that Mr Pickering was not allowed to represent him.
The landlord told the court he was only interested in dealing with Mr Pickering – not Properties Northside or even Coastview – but the judge said “little weight” could be placed on his evidence.
“He had a relationship with Raine & Horne. He was no doubt under some pressure to act quickly in relation to his property,” the judge said. “In those circumstances, the likelihood is that he would have gone back to Raine & Horne.
“If he had done so, Raine & Horne would have earned the management fees that Coastview has earned to date and the likelihood is that it would have continued to earn management fees in respect of the current lease.”
The judge awarded Properties Northside $9,900 in compensation for one of the two unauthorised property sales but refused to award any compensation for the other.
The court also ruled that Coastview could not do business before April 2018 with any of the clients who were on Properties Northside’s books before August 2013.
Mr Pickering told Residential Property Manager that he was surprised by the court’s decision.
“We thought it was extremely inconsistent and we’re very disappointed at the judge’s ruling,” he said. “How it’s gotten to this point is beyond me.”