| Restrictions | OK |
|---|---|
| Jurisdiction | Employment Relations Authority - Auckland |
| Reference No | AA 529/10 |
| Hearing date | 22 Dec 2010 |
| Determination date | 24 December 2010 |
| Member | K J Anderson |
| Representation | G Bevan ; G Stone |
| Location | Auckland |
| Parties | Transpacific Industries Group Ltd v Green |
| Summary | INJUNCTION – Restraint of trade – Applicant sought interim injunction to prevent respondent commencing employment with competitor or approaching or soliciting respondent’s customers – Applicant claimed respondent breached employment agreement by commencing employment with another company (“SEL”) – Respondent’s manager (“B”) claimed applicant and SEL competing in aggressive industry – Respondent told applicant had been offered role with competitor “too good to pass up” – Respondent resigned four days later and confirmed offer from SEL – Applicant told respondent three month restraint of trade applied at end of notice period – Applicant told respondent did not need to work during notice period but needed to be available if required – Respondent noted low commission rate affected decision to resign and would be three months without income – Applicant told respondent aware working for SEL during three month period and work breached employment agreement – Applicant requested respondent attend meeting, explain understanding of restraint clause and detail any contact with applicant’s actual or potential customers – Applicant told respondent matter resolved if complied with employment agreement and provided undertakings - Respondent told applicant cancelled employment agreement due to fundamental breaches as respondent not in commission scheme and placed on garden leave – Applicant accepted respondent could cancel agreement provided gave one month’s notice or forfeited salary – Respondent statutorily declared undertakings would not work in area, solicit or accept business from applicant’s clients or attempt to hire applicant’s employees – Applicant claimed undertakings unacceptable and noted respondent paid by applicant while allegedly trained by SEL – Authority noted respondent acknowledged accepted employment with SEL and wished to start during restraint period – Found respondent prima facie about to breach employment agreement – Noted very real concern respondent would provide SEL with information damaging applicant’s business interests – Respondent claimed did not have sufficient knowledge of respondent’s operation – SEL claimed had no interest in information respondent might recall – Authority found SEL’s claim questionable given SEL offered respondent substantial salary increase – B claimed respondent involved at significant strategic level – Authority found applicant had proprietary interest that could be protected by restraint of trade – Found respondent held reasonably senior position and on balance of probabilities had access and responsible for sales strategies – Applicant claimed market and growth strategy not yet implemented and respondent participated in strategy’s highly confidential weekly meetings – Respondent claimed struggled to recall meetings and expertise unrelated to position at applicant – Authority found respondent more closely involved in sales strategy than prepared to acknowledge – Found respondent had sufficient involvement to warrant restraint in employment agreement – Respondent claimed had limited national involvement – Authority found respondent would on balance of probabilities have had increasing exposure to North Island and possibly national business – Found based on geographical spread of applicant’s business ambit and term of restraint of trade clause reasonable – Found respondent’s salary adequate consideration for restraint of trade clause – Found arguable case for enforcing restraint – Found damages would not provide applicant adequate remedy – Noted respondent decided to commit prima facie breach of employment agreement - Found balance of convenience marginal – Found looking at overall justice of case equitable to grant interim order – Application granted – COUNTER CLAIM – Respondent told applicant cancelled employment agreement due to fundamental breaches as respondent not in commission scheme and placed on garden leave - Claimed as applicant accepted respondent’s cancellation of employment agreement, whole agreement became void – Authority found applicant did not accept cancellation, and agreement allowed for respondent to be on garden leave given commencing employment with competitor – Found inconclusive evidence applicant underpaid respondent’s commission – Business Development Manager |
| Result | Application granted ; Costs reserved |
| Main Category | Injunction |
| Statutes | ERA s161;ERA s162(f);Illegal Contracts Act 1970 |
| Cases Cited | Airgas Compressor Specialists v Bryant [1998] ERNZ 42;Century Yuasa Batteries (NZ) Ltd v Johnson, unreported, Colgan J, 11 November 2004, AC 65/04;Credit Consultants Debt Services v Wilson [2007] ERNZ 252;Fuel Espresso Ltd v Hsieh [2007] ERNZ 60 |
| Number of Pages | 16 |
| PDF File Link: | aa 529_10.pdf [pdf 57 KB] |