Employees ' Damages for breach of contractual and fiduciary obligations

• Published date: 24 August 2021
• Law Firm: Rostron Carlyle Rojas
• Author: Mr Michael Sing

Employees are generally subject to the express terms of their employment agreements and implied and fiduciary duties and statutory duties.

Breaching those duties may lead to significant damages claims against them, although the exact measure of damages may require an election by the Employer.

The Property Investors Alliance Pty Ltd/as PIA v Qi, Tong and Rental Master Pty Ltd

In this case, Qi and Tong (the employees) were employed by the Plaintiff (PIA), a real estate company and property developer whose business included leasing and management of residential investment properties. One of its major assets was a rent roll of over 4000 properties.

The undisputed facts at trial were that the employees, while employed by PIA:

1. established the third defendant, Rental Master Pty Ltd (RM) to compete with PIA;
2. leased office space for RM;
3. obtained a corporate real estate agents licence for RM;
4. in breach of their contractual, fiduciary and statutory obligations caused clients of PIA to become clients of RM and RM to manage 44 properties owned by those clients; caused Rental Master to manage 60 further properties;
5. sent some 55 emails relating to PIA's clients from their PIA email accounts to their personal accounts and that those emails contained "confidential information" within the meaning of their employment contracts.

Relief Sought

PIA sought orders from the Court for:

1. an injunction to restrain the employees;
2. declarations as to the breaches by the Employees of their fiduciary contractual and statutory duties (under S 182 of the Corporations Act); and
3. damages.

Employment Agreements

The Employees were employed pursuant to written contracts entitled "Letter of Appointment Terms". Each had the job title "Property Manager's Assistant (Property Officer)" and later "Junior Portfolio Manager". Each had management responsibilities for approximately 400 investment properties managed by PIA on behalf of its clients.

In their initial roles as property manager assistants, the Employees were to support "the Property Manager in the day to day management of their portfolio of investment properties" including:

(a) dealing with enquiries;

(b) biannual property inspections;

(c) showing properties to prospective tenants; and

(d) monitoring and managing the payment of rent by tenants.

There were express terms of the Employees employment by PIA that:

(a) during their employment, they would not enter into any contract which was contrary to the interests of PIA or in which they...