| Restrictions | Includes non-publication order |
|---|---|
| Jurisdiction | Employment Relations Authority - Christchurch |
| Reference No | [2011] NZERA Christchurch 205 |
| Hearing date | 18 Nov 2011 |
| Determination date | 16 December 2011 |
| Member | D Appleton |
| Representation | T Kennedy ; S Daily |
| Location | Nelson |
| Parties | Tasman Auto Electrics Ltd v Coldicott |
| Summary | BREACH OF CONTRACT – GOOD FAITH – Applicant claimed respondent breached obligations of fidelity, confidentiality, unlawful competition and good faith – Respondent suggested to applicant that sales could be increased by operating Trade Me account (“T”) – Applicant accepted respondent’s suggestion and tasked respondent with maintaining T – Applicant claimed respondent deliberately withdrew from carrying out work in order to damage Trade Me sales and in order to facilitate success of competing business – Respondent claimed was instructed by applicant not to do anymore work on T – Respondent incorporated own company and started selling items on Trade Me – Applicant director (“R”) told respondent that another Trade Me account was selling same or similar items as applicant – Respondent did not inform applicant that other Trade Me account was respondent’s – Respondent changed Trade Me account details so that pick-ups no longer possible after R indicated would buy something from account and selected pick-up option – Respondent resigned – Applicant claimed respondent misused confidential information during employment – Applicant claimed respondent took USB memory stick containing information about applicant’s Trade Me listings – Applicant claimed respondent ordered part at end of employment but failed to follow usual ordering protocols which suggested respondent intended to steal part – Respondent accepted opened accounts with three suppliers, all of which were used by applicant, during employment with applicant – Authority found suppliers widely known to auto-electrical trade and respondent’s knowledge of them derived from stock in trade rather than work for applicant – Found suppliers’ identities did not constitute confidential information – Found terms on which applicant purchased parts for sale were confidential but information did not assist respondent – Found totality of work carried out by respondent on T gave respondent unfair advantage in knowing what sold and what did not – Found product information published by parties in respective Trade Me entries not confidential – Found no evidence respondent wilfully misappropriated customer information – Respondent accepted sold small number of same or similar items as applicant was selling at same time – Respondent claimed however that strived to sell same or similar items at time T did not list them – Found respondent took deliberate steps to avoid being detected in own business activities – Found respondent knew activities would not have been acceptable to applicant which suggested explanation of care taken not to compete was an ex post facto one – Found respondent sold many items which were either exactly the same as those sold by applicant or very similar – Found act of actively selling same parts as applicant during employment constituted breach of respondent’s obligations of good faith and express term not to compete – Found respondent breached duty of good faith by competing with applicant during employment and failing to disclose to applicant that set up competing company which was trading on Trade Me – Found respondent’s explanation that did not take away folder of battery information reasonable – Found no proof respondent stole USB memory stick or part ordered by respondent at end of employment was intended to be used unlawfully – Found no deliberate intention by respondent to run down applicant’s business by not continuing work on T – Applicant sought damages in respect of diversion of sales – Found reduction caused directly from decrease in listings posted by respondent rather than respondent’s competing activities – No damages – Applicant sought damages in respect of loss of chance caused by respondent listing more items for sale – Found not clear that if respondent had not listed items in competition with applicant that applicant would not still have suffered decline in number of listings and would not have taken up chance claimed to have been lost – No damages – Applicant sought damages for loss of work time and resources spent in setting up T – Found applicant derived value from time spent by respondent in setting up T – No damages – Applicant sought damages for work time spent by respondent on own Trade Me account – Found no breach by respondent – No damages – Applicant sought special damages in respect of legal fees – Found descriptions of many entries in record too imprecise to ascertain whether related to preparation for proceedings – No special damages – Applicant sought general damages for general inconvenience – Found no evidence to support claim – Applicant sought account of profits – Found respondent’s employment agreement (“EA”) did not provide for such remedy – INJUNCTION – Applicant sought injunction restraining respondent from acting in breach of EA – Found springboard advantage respondent gained was of assistance when respondent first started trading and so to impose injunction at this stage would amount to de facto stifling of competition – Application declined – PENALTY – Applicant sought penalty for respondent’s breaches of EA – Found respondent knowingly acted in breach of separate duties which were clearly expressed in EA – Found breaches should be treated globally as arose out of same set of actions by respondent – $5,000 penalty appropriate – Auto Electrician |
| Result | Application granted (penalty) ; Penalty ($5,000)($3,750 payable to applicant)($1,250 payable to Crown) ; Application dismissed (breach of contract)(good faith)(injunction) ; Costs reserved |
| Main Category | Breach of Contract |
| Statutes | ERA s4A;ERA s134;ERA s162;Legal Services Act 2000 s40(2) |
| Cases Cited | Auckland Regional Council v Tilialo unreported, R A Monaghan, 15 October 2009, AA368/09;Binnie v Pacific Health Ltd [2004] ERNZ 438;NZ Timber Industry Employees IUW v Waimate Timber Co Ltd and Ors (1990) 3 NZELC 97,890;Terrapin Ltd v Builders’ Supply Co (Hayes) Ltd [1967] RPC 135;Wadley v Salon D'Orsay Ltd [1998] ERNZ 369 |
| Number of Pages | 18 |
| PDF File Link: | 2011_NZERA_Christchurch_205.pdf [pdf 79 KB] |