Court bars former Southern Cross Computer Systems director Chris Palmer from working for rival reseller

The supreme court has effectively barred former Southern Cross Computer Services executive director Christopher Palmer from working for rival IT firm Blue Connections after it found he was bound to an agreement following the sale of his Southern Cross shares.

The court determined Palmer, former director of alliances at SCCS, was subject to certain clauses after selling his 40 percent stake in the business for $3.5 million in June 2016. The Melbourne-headquartered IT firm has since rebranded as SXIQ.

The agreement provided that Palmer would remain employed by SCCS and be subject to a number of restraints for a period of up to four years from the completion of the share sale, particularly that he would not work with a Southern Cross competitor. 

CRN reported Palmer parted ways with Southern Cross earlier this year.

In June 2017, the court heard Palmer had for several months been supplying services to Melbourne-based Blue Connections, which it deemed a direct competitor to Southern Cross, for one day a week and for $5000 per month. Southern Cross sought an injunction to enforce the restraining clauses, which Judge McDonald granted.

“I have concluded that the restraint imposed upon Palmer by cl 14.1 of the Share Sale and Purchase Agreement (‘Agreement’) is enforceable,” Judge McDonald said. “The plaintiffs are entitled to an injunction operative until 28 June 2020 restraining Palmer from having any involvement in the business of Blue Connections Pty Ltd.”

According to the court filing, SCCS also sought orders that would restrict Palmer from poaching employees who worked for Southern Cross as at 28 June 2016.

Southern Cross also sought to restrain Palmer from soliciting, for Blue Connections, business from companies that were customers of SCCS during the 12 months to 28 June 2016.

Judge McDonald was not at the time prepared to make an order restraining Palmer from soliciting customers of SCCS “without a list of the relevant customers being prepared and being annexed to an order of the court”.

Palmer joined SCCS in 2000 as the senior business development manager. In 2007 he became a company director and later executive director. Palmer was responsible for overseeing the partnerships that formed the SCCS solutions portfolio and supporting and fostering the sales effort Australia-wide. He ceased as a director in November 2016.

The acquisition of SCCS was announced in August 2016 when a consortium led by John Hanna acquired a majority stake of Melbourne-headquartered SCCS, with Hanna becoming the company's managing director.

The company's former managing director Mark Kalmus, who was with the company since 1996, departed in December 2016.

Palmer did not respond to CRN's requests for comment.

Southern Cross was reborn under the SXIQ brand in June with a major focus on cloud services – a strong suit for Hanna, who previously helped build the managed services arm at multi-state MSP Interactive.

Updated 17 August at 12.45pm to clarify that SCCS has rebranded as SXIQ.