Why is it unethical to protect your customers? If you have lost the customer to the ex engineer why are you even worrying about it? The customer obviously wasn't worth having to begin with if they are prepared to jump ship to save a tenner. I would tell them the charge for defaulting the system and let them make their minds up. There is nothing they can sue you for, the judge would see it that you have protected the customer from potential sabotage, as their service provider you are obliged to ensure that there is no weak areas. The system can be easily defaulted and reprogrammed by any reputable company if the customer wanted to change service providers