| Restrictions | OK |
|---|---|
| Jurisdiction | Employment Relations Authority - Auckland |
| Reference No | [2014] NZERA Auckland 478 |
| Hearing date | 30 Oct 2014 |
| Determination date | 20 November 2014 |
| Member | R Arthur |
| Representation | P Jagose, V Hodgson ; S Grice |
| Parties | Lanca Ltd v Readman and Ors |
| Other Parties | Lenihan, Brickwell |
| Summary | INJUNCTION – RESTRAINT OF TRADE – Applicant sought interim injunction restraining respondents from using applicant’s confidential information, dealing with applicant’s customers or carrying out competing business – Management roles – Applicant’s business assets and goodwill sold to third party (“A”) – Respondents accepted employment with A and signed new restraint of trade provisions (“ROT”) but resigned from applicant before settlement of sale – Whether applicant retained proprietary interest in ROTs – Applicant no longer traded |
| Abstract | AUTHORITY FOUND –;INJUNCTION – RESTRAINT OF TRADE: Arguable that applicant retained legitimate proprietary interest in trade and customer connections established by applicant’s investment and endeavour. Applicant’s ability to realise current market value of interest through purchase price achieved in sale to A arguably relied in some part on having means to protect value of property sold to A in form of ongoing effect of ROTs. Only weakly arguable that A entitled to enforce ROTs as benefit of any covenants held by applicant. Respondents’ arguments about fairness of bargaining for ROTs technical, somewhat contrived and undermined by respondents’ actions in signing employment agreements with A. ROT clauses preventing respondents from competing with applicant stood little or no prospect of being found reasonable or enforceable. ROT period of more than six months not likely to be upheld as reasonable. Geographic limits for ROTs not relevant because only arguably reasonable ROT provision related to particular, identifiable customers. Second respondent’s e-mail to client company appeared to be clear breach of arguably reasonable element of ROT relating to customer contact. Doubtful that damages resulting from any misuse of confidential information capable of relatively straightforward assessment. Real issue about respondents’ ability to pay damages. Damages not adequate alternative remedy. Negative effects on applicant of not granting limited interim injunction greater than those on respondents if injunction ordered. Applicant’s action not delayed unduly. Interim injunction would still allow respondents to continue business with exception of not seeking to deal with entities that were applicant’s customers over previous two years. Overall justice lay with applicant as respondents had gone into business with eyes wide open about risks. Appropriate to issue interim injunction prohibiting solicitation of entities that were customers or clients of applicant over previous two years. Appropriate for interim injunction to run for six month period. Application for injunctive relief partially granted. |
| Result | Application partially granted ; Orders made ; Costs reserved |
| Main Category | Injunction |
| Statutes | ERA s162;ERA s174;Illegal Contracts Act 1970 s8(1)(b) |
| Cases Cited | Allright v Canon New Zealand Ltd (2008) 6 NZELR 367;Atlas Copco South Pacific Holdings Pty Ltd and Lancaster Group Ltd [2014] NZCC 20;Credit Consultants Debt Services NZ Ltd v Wilson (No 2) [2007] ERNZ 205;Dawnay Day & Co Ltd v de Braconier d’Alphen [1997] IRLR 285;Dawnay Day & Co Ltd v de Braconier d’Alphen [1998] ICR 1068;Green v Transpacific Industries Group (NZ) Ltd (2011) 8 NZELR 238;Klissers Farmhouse Bakeries Ltd v Harvest Bakeries Ltd [1985] 2 NZLR 129;Marshment v Sheppard Industries Ltd [2010] NZEmpC 98;PGG Wrightson Ltd v Jary [2008] ERNZ 476;Pottinger v Kelly Services (New Zealand) Ltd [2012] ERNZ 411;Precision Tracking (NZ) Ltd (Formerly CTL Finance Ltd) v Tait unreported, H Doyle, 16 December 2009, CA216/09;Stenhouse Australia Ltd v Phillips [1974] AC 391;Warren Skerrett Investments Ltd v Broad [2013] NZERA Christchurch 224;Wellington Free Ambulance Service Inc v Adams [2010] ERNZ 128 |
| Number of Pages | 24 |
| PDF File Link: | 2014_NZERA_Auckland_478.pdf [pdf 372 KB] |