District Court Judge Gordon Barrett awarded more than $200,000 in damages to Harcourts after Alex Ouwens – current institute president – and his business partner Nathan Casserly breached the conditions of their franchise agreement by setting up a competing business, and by abandoning their Adelaide Harcourts Ouwens Casserly franchise.
Ouwens and Casserly testified that they had resolved to set up their own real estate business – Ouwens Casserly – because they had been disappointed Harcourts would not allow them to establish a Henley Beach franchise under favourable fee arrangements that the pair had observed were on offer to agents in Harcourts’ New Zealand business.
According to the judgment, it “appears” that then-CEO of Harcourts Greg Moulton had tried to convince Harcourts’ board to accept the “aggregation of fees” arrangement for the prospective franchise in mid-2013, but the board would not countenance such an arrangement.
On the day before the 2014 Australia Day long weekend, Ouwens and Casserly informed Harcourts, through their lawyers, that they would be establishing a competing real estate agency the following Tuesday.
According to the judgment, the lawyer’s letter stressed that the pair would maintain their commitment to their Adelaide Harcourts Ouwens Casserly franchise on East Terrace (which was separated from Harcourts SA’s head office by a corridor).
But Ouwens and Casserly told the court two events in late January convinced them to completely rebrand the East Terrace franchise – swapping the blue Harcourts Ouwens Casserly banner for an orange Ouwens Casserly one – as well as the Henley Beach office.
The first event was a conversation with Moulton, whom Casserly happened to run into in the corridor of the East Terrace building.
Moulton, the judgment reads, told Casserly that Harcourts would be terminating the Adelaide Harcourts Ouwens Casserly franchise that week.
That same morning, Ouwens and Casserly received an email from the head of real estate advertising at The Advertiser, Bill Dimou, saying that Harcourts might be applying for an injunction preventing trading under the orange brand.
And it was not the first time the pair had been made privy to internal information about Harcourts’ intentions in relation to the franchise negotiations.
According to the judgment, Moulton had sent Ouwens and Casserly a copy of emails between two Harcourts employees mentioning the termination of the Adelaide franchise.
“Although there was no request by anyone in that exchange for Mr Moulton to keep the emails confidential, it is not difficult to see why the correspondents within Harcourts might see the communications as confidential,” the judgment reads.
“Mr Moulton said that he had ‘possibly’ sent to the defendants [Ouwens and Casserly] an internal Harcourts briefing discussing the November negotiations between the plaintiff [Harcourts] and the defendants as to the financial arrangements for Henley Beach.
“… That is despite that email exchange having been sent to Mr Moulton headed ‘for your eyes only’.”
The judgment says it is clear that Moulton was “keeping the defendants well informed about Harcourts’ plans and intentions regarding the franchise”.
Moulton left Harcourts and became the CEO of Harris Real Estate in September 2014. He is vice-president of the Real Estate Institute and immediate past president.
Ouwens and Casserly argued in court that they had no intention to transfer their entire business to the orange Ouwens Casserly brand before the conversation with Moulton and the email from Dimou.
But Judge Barrett found that “the documentary evidence contradicts the defendants’ evidence that prior to 28 January they had no intention of wholly transferring their franchise business to the orange brand”.
“I find that they did have such an intention before January 28.
“I find that they had such an intention from early December 2013.”
The judgment says Ouwens and Casserly had presented their staff with the new orange advertising material at a Christmas party on 19 December 2013 – though Ouwens testified that agents were only then authorised to switch Henley Beach properties to the orange branding.
The judgment also says Ouwens had sent an email to signpost production business Smartposts, dated 14 January 2014, saying the East Terrace office required “just a few logo changes and a new signboard out the front lawn”.
Barrett found that what “Moulten and Dimou told them … could not have come as any surprise at all” and that Ouwens and Casserly “were fully prepared by 28 January for the inevitable reaction of the plaintiff”.
Ouwens and Casserly had also argued that the franchise agreement did not prevent them from establishing a competing business at Henley Beach, and denied abandoning their East Terrace franchise.
But Barrett concluded that Ouwens and Casserly had, in fact, breached their franchise agreement with Harcourts by taking steps to set up the Henley Beach office without authorisation, and that, by 30 January 2014, the pair had abandoned the Adelaide franchise and the franchise agreement.
The judge awarded $239,787 to Harcourts, but will hear further arguments from both parties concerning the final quantity of damages, costs and interests.
Ouwens and Casserly had originally joined Harcourts as real estate agents in 2007, when they were both in their mid-thirties.
According to Ouwens’ LinkedIn page, he had once been the “#1 consultant” for the “#1 Harcourts office in Australia”.
Harcourts SA CEO Andrew Friebe told InDaily in a statement this morning: “Whilst these situations are never pleasant, we are happy with the outcome of the case and the integrity of the franchise system”.
Asked for comment on the judgment, and whether Ouwens Casserly would appeal the decision, Ouwens told InDaily: “The matter is with our legal advisors under review.”
“It is not appropriate for Ouwens Casserly Real Estate to comment further at this time as it is still before the court for further determination as to quantum,” he said in a statement.
InDaily has contacted Moulton and Dimou for comment.
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