| Restrictions | Includes non-publication order |
|---|---|
| Jurisdiction | Employment Relations Authority - Wellington |
| Reference No | [2012] NZERA Wellington 57 |
| Determination date | 29 May 2012 |
| Member | P R Stapp |
| Representation | T McGinn ; C Matsis |
| Location | Wellington |
| Parties | Wilkinson Insurance Brokers Ltd v Allan and Ors |
| Other Parties | Meridian General Brokers Ltd |
| Summary | RESTRAINT OF TRADE – Applicant sought order respondents comply with restraint of trade agreement between applicant and first respondent – Authority found restraint reasonable and first respondent breached restraint – Found second respondent aided and abetted first respondent’s breach of restraint – Respondents ordered to comply with restraint – PENALTY – Applicant sought penalties for first respondent’s breach of restraint and second respondent aiding and abetting first respondent’s breach of restraint – Found respondents had genuine belief restraint unenforceable – No penalty |
| Abstract | First respondent minority shareholder and employee of business purchased by applicant. First respondent became employee of applicant and signed employment agreement with restraint of trade provision. Restraint applied for three years and included geographical restraint. First respondent ceased employment with applicant and employed by second respondent (“M”). First respondent claimed restraint unreasonable. Number of applicant’s clients transferred business to M. Applicant claimed first respondent breached good faith obligations by not communicating first respondent’s intentions to applicant when left employment with applicant. Applicant claimed M aided and abetted first respondent’s breach of contract. Applicant sought penalties.;AUTHORITY FOUND –;RESTRAINT OF TRADE: Authority ordered non-publication of names of applicant’s clients. Restraint period related to commercial considerations and designed to allow first respondent to continue having contact with clients while managing risk first respondent would leave employment. First respondent could not assume restraint unenforceable. Restraint reasonable. First respondent breached restraint by contacting applicant’s clients. First respondent could have communicated intentions to applicant better but first respondent did not have firm plans. Movement of clients from applicant to M linked to departure of first respondent but insufficient evidence to find first respondent acted deliberately and wilfully. M did not aid and abet first respondent’s breach of restraint by employing first respondent even though first respondent employed to do work M knew covered by restraint. M aided and abetted first respondent’s breach of restraint by ignoring restraint when open to reaching arrangement with applicant. Applicant failed to establish monetary loss caused by breach of restraint. Respondents ordered to comply with restraint.;PENALTY: First respondent had genuine belief restraint unenforceable and behaviour not deliberate or wilful. M believed restraint unenforceable and did not act with intent to gain. No penalty. |
| Result | Application granted (restraint of trade); Application dismissed (penalty); Costs reserved |
| Main Category | Restraint of Trade |
| Statutes | Illegal Contracts Act 1970 |
| Number of Pages | 12 |
| PDF File Link: | 2012_NZERA_Wellington_57.pdf [pdf 111 KB] |