| Restrictions | OK |
|---|---|
| Jurisdiction | Employment Relations Authority - Auckland |
| Reference No | AA 389/10 |
| Hearing date | 5 Aug 2010 - 6 Aug 2010 (2 days) |
| Determination date | 27 August 2010 |
| Member | R Arthur |
| Representation | S Cook, G Mayes ; D Erickson |
| Location | Auckland |
| Parties | Edwards v ERS New Zealand Ltd t/a Transpacific Industrial Solutions |
| Summary | RESTRAINT OF TRADE – Applicant applied for declaration former employment agreement did not restrain applicant from taking up new employment – Applicant claimed restraint of trade did not apply to respondent because specifically referred to publicly listed company which did not provide services to customers and therefore could not be said to be providing services of similar nature to new employer (“S”) – Authority found benefit of covenants intended for whole group including respondent – Applicant claimed S not competitor – Found some overlap between services offered – Found S met definition of competitor – Found skills gained through former employment applicant’s to use – Found non-competition clause unenforceable – Found respondent and S in business of competing to win contracts to provide services to clients – Applicant claimed companies provided different services to customers – Found S competing business – Applicant claimed respondent had no legitimate proprietary interest to protect because no connection with customers, suppliers or distributors – Applicant claimed confidential information adequately protected by confidentiality clause – Found long-term business strategy, financial information, knowledge of key contracts, sales pipeline information, success of previous pitches and key terms negotiated with clients all proprietary interests – Applicant claimed restraint should be no longer than period of garden leave and should only apply to services and customers of respondent at time restraint entered – Found restraint any longer than three months unreasonable – Found respondent already had opportunity to recruit replacement and therefore six month restraint unreasonable – Found garden leave should be taken into account in determining reasonableness of restraint period – Found applicant subject to restraint of three months – Found respondent had legitimate proprietary interest in maintaining stability of workforce – Found three month restraint applied to employee non-solicitation clause – UNJUSTIFIED DISADVANTAGE – Applicant claimed unlawfully suspended – Applicant informed not required to work out notice period – Found applicant agreed to garden leave – Found respondent identified perceived threat to intellectual property and entitled to block applicant’s email access and retrieve work tools – Applicant required to return many boxes of company documentation amassed at home – Found confirmed respondent not unjustified in concerns about information held – COUNTERCLAIM – BREACH OF CONTRACT – Respondent claimed applicant breached duties through misuse of computer system for benefit of S, breached terms of confidentiality, misused delegated authority and failed to cooperate and comply with lawful and reasonable requests – Applicant sent company documents to home email address – Found explanation unconvincing and actions not consistent with duty of fidelity – Found insufficient evidence to support applicant fed information to S – Applicant failed to meet deadline regarding investigation into personal grievance made by former staff member – Found actions uncooperative and breached duty of trust and confidence – Applicant offered customer credit in return for donation of wine to kindergarten fundraising event which wife involved in – Found transaction unorthodox and inappropriate use of delegated authority – Found applicant breached duty of fidelity and to act within delegated authority – PENALTY – Found breaches deliberate and wilful – $3,000 penalty appropriate – General Manager |
| Result | Application partially granted (restraint of trade) ; Application dismissed (unjustified disadvantage) ; Application granted (breach of contract) ; Penalty ($3,000)(payable to respondent) ; Costs reserved |
| Main Category | Restraint of Trade |
| Statutes | ERA s133;ERA s135;ERA s136;ERA s174;Illegal Contracts Act 1970 s8;Illegal Contracts Act 1970 s8(1)(b) |
| Cases Cited | Airgas Compressor Specialists v Bryant [1998] 2 ERNZ 42;ASTE Te Hau Takitini O Aotearoa v Hampton [2002] ERNZ 491;Bearing Point Australia Pty Limited v Hillard [2008] VSC 115;Condor Insurance Group Limited v Kearns unreported, Travis J, 4 May 1999, AC 27/99;Credit Consultants Debt Services v Wilson [2007] ERNZ 252;Littlewoods Organisation Ltd v Harris [1997] 1 WLR 1472;Provident Financial Group v Hayward [1989] ICR 160;Stenhouse Australia v Phillips [1974] AC 391;Tullet Prebon (Australia) Pty Ltd v Purcell [2008] NSWSC 852;William Hill Organisation Limited v Tucker [1999] ICR 291 |
| Number of Pages | 24 |
| PDF File Link: | aa 389_10.pdf [pdf 81 KB] |