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Two cases decided by the Supreme Court of Queensland in 2025 illustrate, in sharp relief, why drafting a restraint of trade clause is not a box-ticking exercise. One employer lost its application for an injunction because three words in its contract were too broad. Another employer had its restraint clause fully enforced because its contract was precisely and carefully drafted. The difference in outcomes was not about the law; it was about the words on the page.
With a federal ban on non-compete clauses for most Australian workers approaching in 2027, the lessons from these decisions have never been more pressing.
Why Restraint Clauses Fail, and Why That Matters More Than Ever
Restraint of trade clauses are presumed void at common law. The burden falls on the employer to establish that the clause goes no further than is reasonably necessary to protect a legitimate business interest. Queensland courts apply that test strictly.
Unlike New South Wales, which has the Restraints of Trade Act 1976 (NSW) allowing courts to “read down” overreaching clauses to save them, Queensland offers no such safety net. If your clause is too broad, a Queensland court will not fix it for you. It will simply refuse to enforce it.
That strict approach is on full display in the two decisions that follow.
The Case That Failed: Perpetual Limited v Maglis [2025] QSC 71
Perpetual Limited employed Constantine Maglis as a financial adviser, managing client portfolios for Perpetual Trustee Company Limited. He was eventually promoted to an “associate partner” and then “partner” title (no equity, no partnership interest) before resigning in November 2024 with three months’ notice. He joined Ord Minnett, a direct competitor.
Perpetual sought an interlocutory injunction to enforce a non-solicitation clause that prevented Mr Maglis from approaching or accepting approaches from “Clients” for a period of 24 months (with cascading shorter periods if the primary period was struck down).
The definition of “Client” was the problem. Under his employment agreement, a “Client” was defined as any person who:
- was a client or customer of Perpetual or any of its related entities during the preceding 12 months; and
- with whom Mr Maglis “worked or had contact or dealings” at any time during the last 12 months of his employment.
The Problem With “Had Contact”
Chief Justice Bowskill dismissed the application. The critical issue was the phrase “had contact or dealings.”
That phrase was not confined to commercial or work-related interactions. On its ordinary meaning, it could encompass social contact, passing encounters, or any incidental interaction having nothing to do with the provision of financial advisory services. A client Mr Maglis had bumped into at a function, greeted at a corporate event, or exchanged pleasantries with in the office foyer could arguably fall within the definition.
Perpetual argued the words should be read as if prefaced by something like “substantial work-related.” Chief Justice Bowskill rejected that argument. Restraint clauses are construed strictly. Any ambiguity is resolved in favour of the employee. A court will not read in limiting words that the parties did not include.
Perpetual also argued the phrase “had contact or dealings” could be severed from the definition of “Client” to preserve the rest of the clause in a workable form. That argument also failed. The phrase was not a discrete, severable component. It was integral to the definition itself, and removing it would amount to rewriting the clause rather than merely severing an objectionable part.
The result: Perpetual could not establish a prima facie case that the restraint was reasonable and enforceable. The injunction application was dismissed.
A number of Perpetual’s clients had already requested to transfer their accounts to Mr Maglis at Ord Minnett. The court was unable to intervene.
The Case That Succeeded: City Fertility Sydney CBD Pty Ltd v Reims Investments Pty Ltd and Anor [2025] QSC 210
City Fertility engaged Dr Simone Campbell through her corporate entity, Reims Investments Pty Ltd, under a clinician services agreement. Dr Campbell was an experienced IVF specialist. The agreement required City Fertility to pay “Cycle Management Fees” for procedures such as egg pick-ups and frozen embryo transfers, procedures Dr Campbell could not bill directly under Medicare.
A dispute arose over fee calculations. The respondents alleged City Fertility had underpaid by approximately $18,048.80 (later revised down to $6,924.50) and purported to terminate the agreement on that basis. City Fertility denied any breach.
The agreement contained a critical drafting feature: the post-termination restraint clauses would not apply if termination arose from an unremedied breach by City Fertility. That provision turned out to be decisive.
Why Precise Drafting and Valid Termination Made All the Difference
Justice Copley found that City Fertility’s interpretation of the fee formula was correct. There had been no underpayment. City Fertility had not breached the agreement. The respondents’ termination notices were therefore invalid. By purporting to terminate on a false basis, the respondents had themselves repudiated the agreement. City Fertility validly accepted that repudiation and terminated.
Because City Fertility was not the party in breach, the post-termination restraints applied in full.
Those restraints prevented Dr Campbell and Reims from:
- treating or soliciting patients with whom Dr Campbell had prior dealings, for 12 months;
- performing IVF services within 50 kilometres of City Fertility’s Newstead and Sunnybank clinics, for 12 months; and
- soliciting City Fertility’s patients, for 12 months.
The respondents argued the restraints were excessive and contrary to public policy. Justice Copley disagreed. The restraints were linked to legitimate business interests. IVF services require collaboration with licensed facilities. Patients could access other specialists. Investment in fertility clinic infrastructure depends on the ability to protect that investment through enforceable contractual protections. The restraints were reasonable in scope and duration.
The restraint was enforced. City Fertility succeeded.
What the Upcoming Federal Non-Compete Ban Means for Your Business
The Federal Government has confirmed that non-compete clauses will be banned for workers earning below the high-income threshold (currently $175,000 per annum) under the Fair Work Act 2009 (Cth), with the ban to take effect in 2027.
Non-solicitation clauses are a different category. They prevent a departing employee from soliciting clients or colleagues; they do not prevent the employee from working for a competitor. Non-solicitation clauses are not currently proposed to be banned, although the Government has indicated it will consult on whether they warrant further regulation.
This means that, for most employers, non-solicitation clauses will remain the primary contractual protection once the non-compete ban takes effect. Getting those clauses right has become more important, not less.
Practical Takeaways for Employers and Business Owners
The contrast between Perpetual and City Fertility produces a clear set of lessons.
Define “Client” by reference to a commercial relationship. The phrase “had contact or dealings” is too broad if it is not explicitly confined to commercial interactions in the course of employment. Your definition of “Client” should be limited to persons with whom the employee had a substantive, work-related, commercial relationship. A court will not add those limiting words for you.
Link your restraints to a legitimate business interest. A restraint that goes further than is necessary to protect a genuine interest in client relationships, confidential information, or goodwill will not be enforced. Be specific about what you are protecting.
Use cascading provisions for time and geography, but do not rely on them to rescue a fatally broad definition. Cascading clauses allow a court to enforce a shorter or narrower restraint period if the primary period is unreasonable. They will not rescue a clause whose core definition is fundamentally flawed.
Ensure your termination is procedurally correct before you seek enforcement. City Fertility succeeded partly because its termination was valid. If you purport to terminate on a basis that later proves unfounded, you may find that you are the party who has repudiated the agreement, which will likely relieve the other party of the restraint entirely.
Review your employment agreements now. If your contracts were drafted more than a few years ago, the “Client” definition may not reflect current drafting standards. Do not wait until a key employee has resigned to find out whether your restraint will hold.
Prioritise non-solicitation drafting ahead of the 2027 non-compete ban. Non-solicitation clauses will carry the weight of post-employment protection for most employers once the ban takes effect. They need to be precisely drafted, commercially grounded, and capable of withstanding scrutiny.
Contact Boss Lawyers
Restraint of trade disputes move quickly. Once a former employee or contractor has begun competing or soliciting clients, every week of delay erodes the protection you were trying to secure. Injunctions are time-sensitive applications. Poorly drafted clauses cannot be fixed after the fact.
Boss Lawyers has deep experience in commercial litigation and restraint of trade disputes across Queensland courts and the Federal Court of Australia. Whether you need your employment agreements reviewed before a key departure, or urgent legal advice because a departure has already happened, we can help.
Mark Harley, Principal Boss Lawyers Pty Ltd Phone: 1300 267 711 Website: bosslawyers.com.au Level 27, Santos Place, 32 Turbot Street, Brisbane QLD 4000
The information in this article is general in nature and does not constitute legal advice. For advice specific to your circumstances, please contact Boss Lawyers directly.
Facing a commercial dispute? Early legal advice is essential. Our commercial litigation lawyers Brisbane provide strategic advice from initial dispute assessment through to trial or negotiated resolution. Call Boss Lawyers on 1300 267 711.
Disclaimer: This is general information only and is not legal advice. You should obtain professional advice specific to your circumstances before taking any action. For advice on your specific situation, contact Boss Lawyers on 1300 267 711.
