| Restrictions | OK |
|---|---|
| Jurisdiction | Employment Relations Authority - Christchurch |
| Reference No | CA 156/06 |
| Hearing date | 16 Aug 2006 |
| Determination date | 16 November 2006 |
| Member | P Montgomery |
| Representation | CH Toogood QC & R Brown ; K Smith & S Rowe |
| Location | Christchurch |
| Parties | Rooney Earthmoving Ltd v McTague & Ors |
| Other Parties | Whiting, Bartlett |
| Summary | BREACH OF CONTRACT - Applicant (REL) sought damages from three individual employees (T"), ("W") and ("B") for alleged breaches of contractual terms - REL claimed first respondent ("T") established company (BMW) in competition with REL while still employed by REL - REL claimed T established BMW while serving notice period - T employed under oral employment agreement - Respondent's evidence preferred - T bound by common law requirement to give reasonable notice - T's written resignation gave over three months notice - T's meeting with REL ended badly - REL ceased paying T - No attempt made by applicant to persuade T to work out remainder of notice - Applicant claimed T used financial information that belonged to REL - Applicant took over three weeks to call T to a meeting - T unimpeded by any restraint of trade, but needed to observe implied duties to REL - Authority found no probative evidence T used information confidential to REL that was obtained during employment -By setting up BMW, T simply put company in marketplace to compete with other earth moving contractors - No breach of obligations to REL - W and B supervisors of contracts undertaken by REL in Canterbury area - W resigned and consented to act as a director of BMW - W aware that in event of BMW obtaining finance would then be in competition with REL - W breached duty to REL by consenting to act as a director of BMW while still employed by REL - W breached implied obligation not to act in manner as to compete with employer while still employed - Authority satisfied W did not use confidential information or business opportunities for personal advantage during course of employment with REL - W had extensive and detailed knowledge of potential customer base in region was not stockpiling work which could later be uplifted by BMW - B gave required notice for resignation - REL alleged B contacted other employees to persuade them to join BMW - B breached implied obligation while still employed by REL, not to act on behalf of BMW, which was about to compete with REL - Also breached duty to REL by attempting to persuade another REL employee to join BMW while still employed by REL - Insufficient evidence to conclude B undermined REL's business relationships with view of transferring potential customers to BMW - Authority did not accept B and T deleted information from REL computer to benefit BMW - B not dismissed for serious misconduct - REL had not even implemented rudimentary process to determine issue - REL claimed proprietary rights over ongoing clients of REL - Cold reality in competitive market any entity could seek services wherever it chose - Issue finely balanced - Considerable degree of loss sustained by REL due to high impact advertising by BMW - Authority found no breaches by T - DAMAGES - No financial loss caused to REL through breach by W - B unsuccessful in persuading REL employee to join BMW, no loss to REL established - REL failed to establish causal link between breaches and alleged losses" |
| Result | Application partially granted (Breach of contract)(W and B) ; Application dismissed (Damages) ; Costs reserved |
| Number of Pages | 13 |
| PDF File Link: | ca 156_06.pdf [pdf 83 KB] |