Portable buildings manufacturer Nomad Modular Building Pty Ltd has taken legal action preventing a former employee from working for a rival firm.
Portable buildings manufacturer Nomad Modular Building Pty Ltd has taken legal action preventing a former employee from working for a rival firm.
The WA Supreme Court ruled in the Henderson-based company’s favour last month, granting an injunction preventing former employee Neville Smith from starting a new job with competitor Australian Portable Buildings Pty Ltd in either Western Australia or Queensland until September 30 2007.
The case against Mr Smith, who left Nomad on March 30, was reliant on an employment agreement he had signed before commencing work with the company in March 2006.
The agreement contained clauses preventing him from working for Nomad’s competitors for a certain period, divulging or using any confidential information belonging to the company for anything other than Nomad’s purposes, as well as inducing, encouraging or soliciting any contractor or agent of Nomad.
Case papers obtained by WA Business News reveal presiding judge, Master Sanderson, noting there was no suggestion at the time that Mr Smith would solicit Nomad’s customers or use information, know-how or related information gained while employed with Nomad to further the interests of his new employer.
Master Sanderson said he did not doubt the integrity of Mr Smith; however, there still existed a risk that he would do so.
“It is simply not practical to suggest that if Australian Portable Buildings Pty Ltd wants to develop its business in Queensland, the information the defendant (Mr Smith) obtained on the Queensland market while working for the plaintiff (Nomad) will not be put to use to favour his new employer and potentially damage the plantiff,” he said.
“The plaintiff has no way of knowing when and if that might happen.”
The case has also revealed the ‘water-tight’ employment contracts that are being offered by both Nomad and APB, which prevent former employees from working for rival firms for up to six months after their original employment has ceased.
According to court evidence, APB required Mr Smith to give six months’ notice of his intention to leave the company and a restraint period of a further six months after his employment ceased.
The case and detailed employment clauses are reflective of the white-hot competition amongst portable building manufacturers in a market, which is largely dependent on lucrative mining and resource industry contracts.
Last month, Nomad was awarded its largest single contract potentially worth up to $60 million to build a 1,500 person accommodation village in Karratha to support Woodside’s Pluto LNG development.
Nomad, APB and Mr Smith could not be reached for comment.
