| Restrictions | OK |
|---|---|
| Jurisdiction | Employment Relations Authority - Auckland |
| Reference No | AA 453/05 |
| Hearing date | 3 Nov 2005 |
| Determination date | 25 November 2005 |
| Member | R Arthur |
| Representation | J Latimer, A Clark ; P Skelton, G Service |
| Location | Auckland |
| Parties | Swift New Zealand Ltd v Campbell |
| Summary | RESTRAINT OF TRADE - Applicant sought declaration on enforceability of restraint of trade provision in respondent's employment agreement - Respondent resigned from position as account manager - Provision prevented respondent from enticing away from applicant the business of any supplier to, or customer of, the applicant for 12 month period after employment terminated - Restraint provision too long, too broad and too wide to be enforceable to extent expressed - Whether restraint reasonable to lesser extent and therefore enforceable - Applicant had proprietary interest in its trade connections with suppliers for which it had exclusive agencies to distribute products in New Zealand - Applicant had proprietary interest in customer relationships developed and maintained by respondent during employment with applicant - Restraint reasonable in respect of trade connections with only five identified suppliers with whom respondent had hosting role when supplier's representatives visited New Zealand - Respondent's contact with customers was such that only shorter restraint was reasonable, with exception of three identified customers where respondent's likely influence supported restraint for longer period - Time needed by applicant to effectively replace respondent was factor in determining reasonable duration of restraint - Nature of applicant's business was such that to restrict restraint geographically would be to defeat its validity - Consideration of other factors: applicant's knowledge of restraint, consideration given for restraint, circumstances of applicant's termination of employment, existence of confidentiality provisions in employment agreement, and public interest - Declaration that restraint of trade provision reasonable and enforceable only to extent of 12 months in respect of five identified suppliers, six months in respect of three identified customers, and three months in respect of other customers - Parties directed to mediation - Leave reserved for parties to proceed with investigation in respect of other issues - Account Manager |
| Result | Application granted ; Orders accordingly ; No order for costs |
| Statutes | ERA s64(2);ERA s64(4);ERA s159(1)(b);ERA s162;ERA s164;Illegal Contracts Act 1970 s8 |
| Cases Cited | Airgas Compressor Specialists Ltd v Bryant [1998] 2 ERNZ 42;BFS Marketing v Field [1992] 2 ERNZ 1105;Cain v Turners and Growers Fresh Ltd [1998] 3 ERNZ 314;Century Yuasa Batteries (NZ) Ltd v Johnson unreported, Colgan J, 11 November 2004, AC 65/04;Grey Advertising (New Zealand) Ltd v Marinkovich [1999] 2 ERNZ 844;SSC & B Lintas NZ Ltd v Murphy [1986] 2 NZLR 436;Space Industries (1979) Ltd v McKavanagh [2000] 1 ERNZ 490;Stenhouse Australia Ltd v Phillips [1974] AC 391;Walley v Gallagher Group Ltd [1998] 3 ERNZ 1153 |
| Number of Pages | 11 |
| PDF File Link: | aa 453_05.pdf [pdf 72 KB] |