| Restrictions | OK |
|---|---|
| Jurisdiction | Employment Relations Authority - Auckland |
| Reference No | AA 236/10 |
| Hearing date | 17 May 2010 |
| Determination date | 21 May 2010 |
| Member | K J Anderson |
| Representation | J Rooney ; D Organ |
| Location | Auckland |
| Parties | Tournament Parking Ltd v Munro |
| Summary | INTERIM INJUNCTION – RESTRAINT OF TRADE – Application to restrain respondent from commencing employment with competitor (“W”) – Respondent employed at applicant as manager – Employment agreement (“EA”) contained non-solicitation confidentiality and clause – EA restrained respondent from entering into business with competitor for one year with no geographical limitation – Respondent resigned from applicant to commence employment with W – Respondent took advice restraint unenforceable – Applicant sought undertaking from respondent to comply with restraint and confidentiality clause – Applicant undertook to reduce restraint to five months – W undertook to not seek confidential information from respondent – Respondent undertook to refrain from soliciting applicant’s suppliers, customers and employees – Applicant sought injunction – Applicant claimed arguable case as respondent prima facie deliberately breached EA – Claimed respondent had knowledge of applicant’s overall operations which would increase W’s competitive edge to detriment of applicant if information disclosed – Claimed restraint reasonable and adequate consideration given - Authority found applicant possessed proprietary interest in confidential business information and trade secrets – Found respondent had sufficient involvement in business operations to warrant restraint being included in EA – Found unlimited geographical ambit unreasonable as restricted respondent from working in carparking industry regardless whether applicant had proprietary interesting that area – Ordered clause be modified pursuant to s8(1)(b) Illegal Contracts Act 1970 (“ICA”) – Found one year restraint period “upper end” of “reasonableness” - Ordered period reduced to 5 months pursuant to ICA – Found adequate consideration given based on respondent’s remuneration level – Found no evidence of unfair bargaining – Found restraint reasonable once modified and arguable case established – Applicant claimed balance of convenience in their favour as no alternative remedy if respondent advertently or inadvertently disclosed confidential information – Claimed revenue loss difficult to quantify if disclosure occurred – Respondent argued balance in their favour because if restraint enforceable, would be unable to work for W causing financial hardship – Found if just respective resources of parties at stake would find balance in respondent’s favour – Found however, respondent consciously breached EA and potential damage would be caused to applicant – Found balance “marginal” either way – Found overall justice favoured applicant – Found respondent’s undertaking to adhere to confidentiality clause insufficient protection – Found respondent “foolhardy” to gamble enforceability of restraint when could have tested its enforceability prior to leaving employment with applicant – Found just and equitable to grant interim injunction – Parties directed to mediation – Ordered restraint of trade clause in EA be modified pursuant to s8(b) ICA – Respondent ordered to adhere to restraint as modified by Authority |
| Result | Application granted ; Orders made ; Parties directed to mediation ; Costs reserved |
| Main Category | Injunction |
| Statutes | Illegal Contracts Act 1970 s8;Illegal Contracts Act 1970 s8(1)(b);Illegal Contracts Act 1970 s8(b);ERA s161;ERA s161(1)(a);ERA s162;ERA s162(f);ERA s164 |
| Cases Cited | Airgas Compressor Specialists Ltd v Bryant [1998] 2 ERNZ 42;Century Yuasa Batteries (NZ) Ltd v Johnson unreported, Colgan J, 11 November 2004, AC 65/04;Credit Consultants Debt Services NZ Limited v Wilson and Anor [2007] ERNZ 252;Fuel Expresso Ltd v Hsieh [2007] 1 ERNZ 60;Walley v Gallagher Group Ltd [1998] 3 ERNZ 1153 |
| Number of Pages | 15 |
| PDF File Link: | aa 236_10.pdf [pdf 57 KB] |