| Restrictions | OK |
|---|---|
| Jurisdiction | Employment Relations Authority - Auckland |
| Reference No | AA 441/05 |
| Hearing date | 25 Aug 2005 - 25 Oct 2005 (4 days) |
| Determination date | 16 November 2005 |
| Member | V Campbell |
| Representation | Ch Toogood QC ; P Wicks |
| Location | Auckland |
| Parties | New Zealand Grazing Company Ltd v Fraser-Jones and Anor |
| Other Parties | WHG Ltd |
| Summary | BREACH OF CONTRACT - Applicant's business involved managing rearing of heifers for clients and providing commercial bull mating service - Respondent employed as service manager and developed close relationships with clients - Applicant alleged respondent breached express terms of employment agreement - Exclusivity of employment clause in agreement - Respondent breached clause when he conducted commercial transactions through his company without seeking approval of applicant - Also used applicant's confidential intellectual property in direct breach of employment agreement when setting up new business - Alleged breach of implied duty of fidelity - Respondent accepted that private grazing of weaners and heifers in direct competition with applicant whilst employed constituted breach of fidelity - Respondent under a duty to advise applicant he was intending to enter competition against applicant day after he left employment - Respondent kept details of potential clients and persuaded them to enter into contract with his company - Breached implied duty of fidelity - Damages would be dealt with in separate determination - Parties directed to mediation - RESTRAINT OF TRADE - Restraint provision in employment agreement for period of 12 months and not geographically limited- Applicant had proprietary interest to protect its client relationships - However restraint not reasonable at time employment agreement entered into - Should have been limited to Waikato and Taranaki areas only - No consideration passed to respondent in return for restraint - Covenant not valid legal contract and was ineffective and unenforceable - Service Manager |
| Result | Application granted in part ; Parties directed to mediation ; No order for costs |
| Statutes | ERA s159;Illegal Contracts Act 1970 |
| Cases Cited | Airgas Compressor Specialists Ltd v Bryant [1998] 2 ERNZ 42;Eil Brigade Road Ltd v Brown unreported, Fogarty J, 5 August 2004, CIV 2001-409-733;Honda NZ Ltd v NZ (with exceptions) Shipwrights etc Union [1990] 3 NZILR 23 ; [1991] 1 NZLR 392;Gallagher Group Ltd v Walley [1999] 1 ERNZ 490;Manchester Property Care Ltd v O'Connor (No 2) [1998] 2 ERNZ 305;M A Watson Electrical v Kelling [1993] 1 ERNZ 9;O'Sullivan v Fletcher Aluminium Ltd [2000] 2 ERNZ 431;Radio Horowhenua Ltd v Bradley [1993] 2 ERNZ 1085;Schilling v Kidd Garrett Ltd [1977] NZLR 243;TISCO Ltd v Communication & Energy Workers Union [1993] 2 ERNZ 779;Walden v Barrance [1996] 2 ERNZ 598 |
| Number of Pages | 10 |
| PDF File Link: | aa 441_05.pdf [pdf 58 KB] |