Thinking of snatching the top talent from your competitors? Make sure to put some money aside to pay for the fight, including your competitor’s lawyers.
In a recent Supreme Court of NSW decision, despite not being a party to the proceedings, Talent2 got stuck with HRX’s legal bill after HRX successfully enforced its post employment restraints against a former employee, Stuart Scott, stopping him from working for Talent2.
As is often the case in restraint matters, the poacher, Talent2, funded
Mr Scott’s defence when HRX decided it wouldn’t sit idly by while its former employee not only took up employment with one of its top competitors in breach of his contractual restraints, but took HRX’s confidential information with him.
Although the Court’s power to order costs against a non-party is used sparingly, in this case the Court found that, without Talent2 footing
Mr Scott’s legal bills, the litigation would not have been necessary.
The Court didn’t have much sympathy for Talent2’s excuse that it
didn’t appreciate the extent of Mr Scott’s breaches and once it discovered that Mr Scott unlawfully took HRX’s confidential information, it pulled its support (including forcing Mr Scott to resign). The Court said that it is the responsibility of the poaching employer to do its homework and ensure that its new recruit is not breaching any restraint obligations.
Finding that Talent2 had much to gain if Mr Scott successfully defended the case brought against him, the Court did not have difficulty in ordering Talent2 to pay HRX’s legal costs.