| Restrictions | OK |
|---|---|
| Jurisdiction | Employment Relations Authority - Auckland |
| Reference No | AA 469/09 |
| Hearing date | 30 Nov 2009 |
| Determination date | 23 December 2009 |
| Member | R Arthur |
| Representation | SJ Davies ; T Clarke, A Clark |
| Location | Auckland |
| Parties | Intercad (NZ) Ltd v Rice |
| Summary | RESTRAINT OF TRADE – COMPLIANCE ORDER – BREACH OF CONTRACT – Applicant sought respondent’s compliance with 12 month non-competition clause in previous employment agreement (“EA”) – Respondent resigned from applicant and joined new company (“S”) – Nine of eleven staff reporting to respondent also left applicant to join S – Applicant claimed enforcement of restraint of trade required to rebuild business without interference from S – Claimed S through respondent had unfair advantage in knowing applicant’s business – Respondent argued interest to be protected not sufficiently defined and restraint unreasonable – Authority found applicant had proprietary interests capable of protection – However, limits to extent respondent possessed or developed “property” in interests – Found respondent had considerable knowledge of commercially important information – Found applicant had definable proprietary interest in respect of respondent in knowledge of information – Found question not whether restraint reasonable but what extent and duration of restraint reasonable – Found restraint not reasonable to extent applicant sought protection from mere competition – Found not reasonable to extend restraint to Australia – Found restraint considerably less than 12 month period necessary – Found period necessary to protect applicant’s confidential information relatively short – Found necessary to modify restraint clause in EA in two ways – Authority ordered firstly, deletion of reference to Australia, and secondly, modification of effective term to 3 months – Found given modification of EA, question of respondent’s breach historical – Found consequently respondent in breach of restraint term during previous period – Authority found respondent to advise Authority if required direction to parties to pursue damages issue in mediation |
| Result | Orders made ; Costs reserved |
| Main Category | Restraint of Trade |
| Statutes | ERA s162;ERA s174;Illegal Contracts Act 1970 s8 |
| Cases Cited | Allright v Canon New Zealand Ltd unreported Couch J, 3 Dec 2008, AC 47/08;Broadcasting Corporation of NZ v Neilsen (1988) 2 NZELC 96,040;Fuel Espresso Ltd v Hsieh [2007] ERNZ 60;Grey Advertising (New Zealand) Ltd v Marinkovich [1999] 2 ERNZ 844;General Billposting Ltd v Atkinson [1909] AC 118;Shepherd Investment Limited v Walters [2006] EWHC 836 (Ch) |
| Number of Pages | 12 |
| PDF File Link: | aa 469_09.pdf [pdf 42 KB] |