| Restrictions | OK |
|---|---|
| Jurisdiction | Employment Relations Authority - Christchurch |
| Reference No | [2012] NZERA Christchurch 163 |
| Hearing date | 31 Jul 2012 |
| Determination date | 03 August 2012 |
| Member | D Appleton |
| Representation | L Ryder ; A Riches |
| Location | Christchurch |
| Parties | Food and Health Standards (2006) Ltd v Dunstan |
| Summary | INJUNCTION – RESTRAINT OF TRADE - Applicant sought interim injunction that respondent be ordered to comply with parties’ employment agreement’s (“EA”) restraint of trade covenants, confidentiality obligations and fidelity obligations (“restraints”) – Authority found arguably EA non-dealing restraint too wide in ambit therefore unenforceable – Found not appropriate for Authority to amend clause at interim stage – Found non-enticing restraint, that respondent prevented from enticing away applicant’s clients, arguably too wide to be enforced – Found duration of non-solicitation clause too long however could be amended. – Found confidentiality restraint not unreasonable in scope and enforceable – Found likely respondent had breached or likely to breach non-dealing restraint – Found arguable case respondent breached non-enticing restraint during 12 month period and solicited applicant’s employees in breach of non-solicitation restraint - Found arguable respondent used confidential information to persuade applicant’s clients to terminate contracts with applicant and breached duty of fidelity – Found balance of convenience favoured granting of injunction for limited period – Found overall justice of case best served by granting of injunction for limited period - Application for injunctive relief granted - Manager |
| Abstract | Respondent employed as manager. Applicant sought interim injunction that respondent be ordered to comply with parties’ employment agreement’s (“EA”) restraint of trade covenants, confidentiality obligations and fidelity obligations (“restraints”). Applicant claimed respondent primary contact for applicant’s customers and respondent had close working relationship with applicant’s clients. Applicant claimed respondent told applicant if respondent left so would all of applicant’s clients. Respondent resigned and gave applicant less than required notice. Respondent’s co-worker (“F”) claimed respondent said would continue same duties but would set up own business (“X”), some of applicant’s clients were “happy to go” with respondent and were ways around EA restraints. Applicant’s client terminated contract. Applicant director (“M”) claimed respondent told M respondent going to approach applicant’s major client (“Y”) about resignation and would be sending letter to all clients advising them of respondent’s resignation and would visit Y to discuss. Respondent did not deny contacting Y but claimed did so as matter of good faith. Respondent claimed would be taking sick leave following day. Respondent provided medical certificate would be unwell for next four days. Applicant private investigator confirmed respondent made domestic flight two days later. Respondent claimed had already requested leave before resignation and decided to take leave anyway as very stressed. Respondent denied dealt with any work related matters while on leave. Three more of applicant’s clients terminated contract.;AUTHORITY FOUND –;INJUNCTION – RESTRAINT OF TRADE: Applicant operated on annual cycle therefore 12 month restraint period justified. Arguably non-dealing restraint too wide in ambit therefore unenforceable. Not appropriate for Authority to amend clause at interim stage. Restraint prohibiting respondent from providing same services as applicant did not appear to include respondent’s building management duties as limited restraint application to “health related services.” Unlikely Authority had power to modify clause however as restraint not unreasonable. Non-enticing restraint, that respondent prevented from enticing away applicant’s clients, arguably too wide to be enforced. Duration of non-solicitation clause too long however could be amended. Applicant likely to have proprietary interest in information considered confidential. Confidentiality restraint not unreasonable in scope and enforceable. Likely respondent had breached or likely to breach non-dealing restraint. Arguable case respondent breached non-enticing restraint during 12 month period and solicited applicant’s employees in breach of non-solicitation restraint. Arguable respondent used confidential information to persuade applicant’s clients to terminate contracts with applicant. Authority noted duty of fidelity still applied outside work hours. Respondent’s travel after took sick leave appeared to be underhand operation. Arguable respondent breached duty of fidelity. Likely alternative employment available for respondent and respondent’s breach of fidelity gave respondent advantage over applicant. However respondent’s duty of fidelity ceased once no longer employee therefore damage to applicant not ongoing. Balance of convenience favoured granting of injunction for limited period. Overall justice of case best served by granting of injunction for limited period. Application for injunctive relief granted. Orders made. |
| Result | Application granted ; Orders made ; Costs reserved |
| Main Category | Injunction |
| Statutes | ERA s162;Illegal Contracts Act 1970 s8;Illegal Contracts Act 1970 s8(1) |
| Cases Cited | BDM Grange Ltd v Parker [2005] 2 NZELR 523;Bradford & Bingley Plc v Holden [2002] EWHC 2445;Bradford Trust Ltd v Paul Edward Roebeck Ltd [2006] 4 NZELR 635;Hivac Ltd v Park Royal Scientific Instruments Limited [1946] Ch 169;Lansing Linde Ltd v Kerr [1991] 1 WLR 251;Medic Corporation Ltd v Barrett [1992] 2 ERNZ 1048 ; [1993] 2 NZLR 122;Pacifica Shipping Co Ltd v Andersen [1986] 2 NZLR 328;Robb v Green [1895] 2 QB 315;A M Satterthwaite & Co Ltd v Gay (1987) 1 NZELC 95,356;Schilling v Kidd Garrett Limited [1977] 1 NZLR 243;SSC & B: Lintas New Zealand Ltd v Murphy [1986] 2 NZLR 436;Walden v Barrance [1996] 2 ERNZ 598;X v Y Ltd v NZ Stock Exchange [1992] 1 ERNZ 863 |
| Number of Pages | 27 |
| PDF File Link: | 2012_NZERA_Christchurch_163.pdf [pdf 319 KB] |