| Restrictions | OK |
|---|---|
| Jurisdiction | Employment Relations Authority - Auckland |
| Reference No | AA 424/08 |
| Hearing date | 11 Dec 2008 |
| Determination date | 12 December 2008 |
| Member | L Robinson |
| Representation | M Whitehead ; A Caisley, E Poyner |
| Location | Auckland |
| Parties | Farac v Gilligan Financial Services Ltd |
| Summary | RESTRAINT OF TRADE - Applicant’s written individual employment agreement contained restrictive covenant clause - Applicant resigned to establish own practice - Parties unable to resolve dispute as to enforceability of clause - Applicant claimed clause should either be declared unenforceable or modified - Respondent claimed clause reasonable and enforceable - Authority found clause was non-solicitation clause not restraint of trade clause - Found clause not well drafted - Found references to competition in clause imperfect and unenforceable - However, found clause overall not so vague as to be completely unenforceable - Found parties agreed applicant should not be able to solicit, canvass or attempt to convert respondent’s clients for period of time - Authority found respondent had interest capable and worthy of protection - Found applicant’s suggested modification to three month period not reasonable - Found two year period in clause not reasonable - Found as one accountancy season was 12 month period, restriction for 12 months reasonable - Found would be sufficient time for respondent to find and settle replacement and for replacement to establish relationship with clients and protect relationship from applicant - Authority modified clause - Applicant ordered to comply with modified clause - Accountant |
| Result | Orders made ; Costs reserved |
| Main Category | Restraint of Trade |
| Statutes | ERA s137;ERA s162;Illegal Contracts Act 1970 |
| Cases Cited | Bates v Gates (1986) 1 NZELC 95,269;Brown v Brown [1981] NZLR 484;Credit Consultants Debt Services NZ Ltd v Wilson (No 3) [2007] 1 ERNZ 252;Fletcher Aluminium Ltd v O’Sullivan [2001] 2 ERNZ 46;Fuel Expresso Ltd v Hsieh [2007] NZCA 58;Gallagher Group Ltd v Whalley [1999] 1 ERNZ 490;H&R Block Ltd v Sanott [1976] 1 NZLR 213,;International News Service v Associated Press 248 U.S. 215, 239 (1918) (Brandeis, J., dissenting) |
| Number of Pages | 7 |
| PDF File Link: | aa 424_08.pdf [pdf 28 KB] |