| Restrictions | OK |
|---|---|
| Jurisdiction | Employment Relations Authority - Christchurch |
| Reference No | CA 40/08 |
| Hearing date | 12 Mar 2008 |
| Determination date | 14 April 2008 |
| Member | H Doyle |
| Representation | W Yates ; M Turner |
| Location | Blenheim |
| Parties | Malborough Mortgages Ltd t/a Mike pero Mortgages - Marlborough v Nichols |
| Summary | COMPLIANCE ORDER – RESTRAINT OF TRADE – Applicant sought order respondent comply with restraint of trade provisions in individual employment agreement (“IEA”) and cease working for new employer National Bank (“NB”) – Respondent argued working for NB not breach of IEA or alternatively restraint of trade provision unenforceable because unreasonable – Applicant’s director (“Y”) argued relied on respondent’s statement that would not re-enter industry when employment offered – Respondent argued statement limited to previous employer – Authority not satisfied respondent understood importance of statement made to Y – Y argued although not all employees in similar position to respondent had restraint of trade clauses, was required in provincial areas to protect territory – Authority found IEA had confidentiality clause, restraint of trade clause, and non-solicitation clause – Authority found Y entered agreement with manager of NB that respondent would not deal with applicant’s clients or clients referred to NB from applicant – Authority found respondent in administrative role – Respondent argued not in breach of restraint of trade clause because carried out different functions for applicant than now carrying out for NB – Authority found restraint of trade clause drafted very widely and restrained respondent from providing same or similar services as what respondent provided for the applicant – Authority found no evidence applicant solicited clients of applicant – Authority concluded restraint of trade clause covered IEA termination for any reason and did apply to NB position – Authority found reasonableness of restraint of trade clause to be assessed on basis of what occurred during employment – Authority distinguished Mike Pero Ltd and Freedom Business Developments Ltd (CIV 2007-442-66) as respondent employed in administrative role – Authority found type of general knowledge obtained by respondent not something applicant could gain protection for – Authority found main concern for applicant that clients being enticed away by competitor in competitive industry – Authority found customers of applicant relying on Y’s skill and judgment not respondents – Authority found no general industry practice in terms of restraints of trade for administrative employees – Authority not satisfied restraint of trade clause reasonable – Found applicant had adequate protection by virtue of confidentiality clause and Y’s arrangement with NB – Authority not persuaded should exercise discretion to modify unreasonable restraint of trade clause – Authority concluded restraint of trade clause unenforceable - Administrative assistant/Personal assistant |
| Result | Compliance declined ; Orders accordingly ; Costs reserved |
| Main Category | Compliance Order |
| Cases Cited | The Broadcasting Corporation of New Zealand v Nielson (1988) 2 NZELC 96;Mike Pero (New Zealand) Ltd and Freedom Business Developments Ltd v Exact Solutions Ltd and Stephen Webb unreported, CIV 2007-442-66, 17 April 2007 |
| Number of Pages | 13 |
| PDF File Link: | ca 40_08.pdf [pdf 52 KB] |