Balancing Restraint and Client Choice: Injunctive Relief Refused in Perpetual Limited v Maglis [2025] QSC 71
When 22 of a departing financial adviser's 57 clients asked to follow him to a competitor, his former employer sought an urgent injunction to stop him. In Perpetual Limited v Maglis [2025] QSC 71, Bowskill CJ refused that relief, delivering a difficult decision for employers relying on broad non-solicitation restraints in the professional services sector.
Background
Mr Maglis joined Perpetual in November 2019 as a senior financial adviser, rising to the title of partner by July 2023. His employment was governed by an agreement containing confidentiality, non-solicitation and non-compete provisions. Clause 5.1 of the agreement prohibited Mr Maglis from, among other things, approaching, canvassing, soliciting, or accepting any approach from any "Client" with a view to obtaining their business in a competing capacity, for a primary period of 24 months with cascading fallback periods.
Mr Maglis resigned in November 2024 and served out a three-month notice period, during which he was placed on gardening leave. On 28 February 2025 his employment ended, and on 3 March 2025 he commenced work at Ord Minnett, a direct competitor. Within weeks, Perpetual received transfer requests from 22 of the 57 clients Mr Maglis had serviced — described by Perpetual as an "unprecedented level of transfer requests".
Perpetual issued proceedings on 21 March 2025, and the matter was heard on an urgent basis. At the hearing, the applicants confined their interlocutory application to enforcement of the non-solicitation provision only.
The Court's Analysis
The Court applied the established two-stage test for interlocutory injunctions: first, whether the applicant has demonstrated a prima facie case; and second, whether the balance of convenience favours the grant of relief.
Enforceability of the restraint clause. Mr Maglis challenged the validity of the restraint on the basis that the definition of "Client" was too broad and uncertain. The definition captured any client of Perpetual "or any of its Related Entities" with whom Mr Maglis had "worked or had contact or dealings" in the 12 months prior to termination. Mr Maglis pointed out that Perpetual had approximately 44 related entities, and that the phrase "had contact or dealings" could encompass purely social or incidental interactions.
Perpetual argued that the breadth was filtered by the requirement for actual contact and that the clause could, in any event, be read down or severed. The Court rejected these arguments, noting that restraint clauses are to be construed strictly, with ambiguity resolved in favour of the employee, and that the Court would not read additional words into the definition. The Court also held that the definition of "Client" was a single composite expression incapable of internal severance, relying on clause 5.4 of the agreement and established authority. While stopping short of finding there was no prima facie case, Bowskill CJ concluded that the argument for validity was "not a strong one".
Solicitation versus accepting approaches. On the question of breach, Mr Maglis gave sworn evidence that he did not initiate contact with any of the clients; rather, they telephoned him, and during his notice period he directed them back to Perpetual. After his employment ended, clients again contacted him at Ord Minnett, and he responded by sending them a carefully worded letter acknowledging the restraint and indicating he would only act if Perpetual consented or the client confirmed he had not solicited them. The letter enclosed a pro forma communication for the client to send to Perpetual requesting its consent.
The Court accepted Mr Maglis's evidence that he did not solicit clients and held that he had not "crossed the line" from passive willingness to active encouragement. The Court cited authority for the principle that merely responding positively to a client-initiated approach does not constitute solicitation. However, the Court accepted there was a prima facie case that Mr Maglis had "accepted approaches" from clients, particularly given the evidence of an "onboarding process" he commenced with some of them.
Balance of Convenience: Client Choice Prevails
Even accepting a weak prima facie case, Bowskill CJ refused the injunction on the balance of convenience. The decisive factor was the impact on third parties — namely the 22 clients who had already expressed their desire to leave Perpetual and continue working with Mr Maglis. The Court expressed "serious concern" about making an order that would restrict the choice of clients to have their personal financial matters managed by a person they trust, in some cases for over a decade. The Court observed that a restraint which limits choices available to customers of services may be unreasonable in the public interest.
While Perpetual argued that damages would be difficult to quantify, the Court noted that questions of causation and remoteness would be significant, given the centrality of client free will.
The application was dismissed, and costs were reserved.
Key Takeaways
The message for employers is clear. Broad, catch-all definitions of "Client" — especially those sweeping in undefined related entities or incidental contact — are vulnerable to challenge, and courts will not rewrite a restraint clause to save it. More fundamentally, where clients have longstanding personal relationships with an adviser and have independently chosen to follow that adviser, a court is unlikely to grant an injunction that overrides their autonomy — particularly in respect of their private financial affairs. Drafting the restraint is only half the battle; enforcing it means reckoning with the people it actually affects.