Roxanne Matthews and Christian McManus became friends while they were studying Business Law at Curtin University. After a few years of working with Best Floors Pty Ltd as marketing and sales executives, they resigned from Best Floors Pty Ltd in December 2020 and decided to set up their own business of selling timber flooring and tiles. They initially thought a partnership would be the best option. However, ultimately on 1 March 2021 they registered a proprietary company called Unique Floors Pty Ltd. The company's business is financed through the issue of 500,000 $1 shares to Roxanne, 300,000 $1 shares to Christian, and 2000 $1 shares to Jordan. Jordan is Christian's cousin. Roxanne and Christian became the directors of the company.

Unique Floors Pty Ltd has the following inserted into its constitution:

"The Replaceable Rules of the Corporations Act 2001 (Cth) shall apply to this company except for the following:

Jordan, an employee and shareholder of the company, shall be the company's marketing manager.

The company shall only operate the business of selling flooring materials."

The company has appointed Christian as the managing director to manage the day-to-day business of the company. Whilst working with Best Floors Pty Ltd, Roxanne and Christian had signed non-compete clauses. The clauses prohibited Roxanne and Christian from competing with the business of Best Floors Pty Ltd during their employment as marketing and sales executives and post-employment for a period of three years. Roxanne and Christian believe that the non-complete clauses cannot bind Unique Floors Pty Ltd as it is not a party to the employment contract.

Roxanne and Christian plan that if their business is successful, they will require more capital. In order to raise the capital, they will convert Unique Floors Pty Ltd into a public company.

Best Floors Pty Ltd wants to bring an action to restrain both Roxanne and Christian from engaging in competing flooring business on the basis that they signed non-competing clauses in their employment contract. Roxanne and Christian argue that Unique Floors Pty Ltd is a separate legal entity and it can do what it likes.

Using the four-step process and with reference to the relevant sections of the Corporations Act (2001) (Cth) and case law, advise Roxanne and Christian on whether Best Floors Pty Ltd is likely to succeed in preventing Roxanne and Christian from opening a flooring company.

-Step 1: Introduce the area of the law.

-Step 2: Discuss the applicable law to solve and quote relevant cases and the sections of the Corporations Act 2001 (Cth) where applicable.

-Step3: Apply the law to the facts to resolve the problem.

-Step 4: Come to a conclusion