Emily Smith and Russel Barton decided to set up a business selling electronic products online. They registered a proprietary company called ER Electron Pty Ltd on July The companys business was financed through the issue of $ shares to Emily and $ shares to Russel, which both Emily and Russel have fully paid up Emily and Russel also became the company\'s directors.

The business was very successful and required more capital. Hence, on January Emily and Russel appointed Yung as the company\'s managing director. Yung signed a noncompete clause during the employment contract. The clause prohibits Yung from competing with the business of ER Electron Ltd during his employment as managing director and for three years after the termination of his appointment.

On March Yung resigned from his position and returned to China for a brief spell, where he met Chin, an investor keen to start a business. This sparked Yung, who, in collaboration with Chin and a friend in Australia, Sean, registered Ally Babu Pty Ltd Yung was not a director or shareholder of the company. He acted as a consultant for the company. Within months of the company\'s operation, of ERs business dropped. ER undertook a market study and found that most customers went to Ally Babu. On closer inspection, they found that Yung was behind the company.

REQUIRED: Advise ER Electron Pty Ltd whether they could take action against Yung and Ally Babu Pty Ltd for breach of the noncompete clause.