| Restrictions | OK |
|---|---|
| Jurisdiction | Employment Relations Authority - Christchurch |
| Reference No | CA 90/07 |
| Hearing date | 24 Oct 2006 |
| Determination date | 03 August 2007 |
| Member | P Montgomery |
| Representation | S Guest ; S Cullen |
| Location | Christchurch |
| Parties | The Consultancy Group Christchurch Ltd v Cullen |
| Summary | BREACH OF CONTRACT – Restraint of trade – Applicant withdrew proceedings against second co-worker – Respondent casual employee – Applicant claimed respondent breached restraint of trade clauses in employment agreement (“EA”) and implied duties of fidelity and good faith – Applicant sought loss of profit reasonably expected from service contract for balance of restraint of trade period set in EA – Respondent denied breached agreement and duties to applicant – Applicant offered contract to provide security services to bar (“B”) – Applicant appointed respondent security manager at B – Applicant claimed had been advised by some staff that other staff had offered manager of B to take over respondent’s security services – Applicant claimed also advised that respondent attempting to recruit respondent’s other existing staff – Manager of B claimed while happy with service provided by applicant, was concerned would lose efficient security team if did not accept new security arrangements – Manager of B told applicant’s manager that if security staff did not stay with applicant then would switch to new security arrangements in best interests of bar – Applicant claimed respondent primary organiser of group attempting to take over security arrangements – Respondent claimed was approached by two other employees of applicant who believed better security arrangements could be provided by third party – Respondent argued was aware of clauses in EA but did not believe applied in circumstances – Authority should view found restraint in context including casual status of employee, pricing strategies and protection of trade secrets – No breach of non-competition clause as involved undertaking further employment with employer in competition with applicant – Authority found one year non-solicitation clause in EA excessive given respondent’s casual status – Also found restraint provision prohibiting employee from accepting employment with “former client” oppressive – One year term also unnecessarily harsh in respect of “current clients” – Authority accepted initiative to secure security contract from B made by other employees and not respondent – However, respondent aware of proposal and was central to practical implementation of plan – Authority cited Peninsula Real Estate Ltd v Harris [1992] 2 NZLR 216 as providing useful summary of current legal position regarding restraint of trade – Authority saw question not whether respondent ring leader but whether participated in process in breach of obligations to applicant – Despite excessive restraint period applicant engaged in planning takeover of contract while still employed with applicant – Authority further found respondent failed to fulfil obligations of fidelity and good faith – REMEDIES – Applicant provided evidence of expected loss of gross profit had relationship continued with applicant over 12 month period – Authority found difficult to assess remedies as no written contract between applicant and B – Found difficult to assess how long applicant would have retained security work with B – Matter further complicated by withdrawal of proceedings against second respondent which meant respondent faced burden of remedies alone – Matters on quantum of remedies reserved – Parties to lodge submissions on quantum at later date |
| Result | Application granted ; Damages (Quantum reserved) ; Costs reserved |
| Main Category | Breach of Contract |
| Cases Cited | Peninsula Real Estate Ltd v Harris [1992] 2 NZLR 216 |
| Number of Pages | 8 |
| PDF File Link: | ca 90_07.pdf [pdf 38 KB] |