| Restrictions | OK |
|---|---|
| Jurisdiction | Employment Relations Authority - Christchurch |
| Reference No | [2011] NZERA Christchurch 30 |
| Hearing date | 14 Dec 2010 |
| Determination date | 21 February 2011 |
| Member | J Crichton |
| Representation | T Mackenzie ; P James |
| Location | Christchurch |
| Parties | Pro-sure Insurance Ltd and Anor v Pratt and Anor |
| Other Parties | Global Insurance Placements Ltd ; Vision Insurance (South Island) Ltd |
| Summary | RESTRAINT OF TRADE – Whether non-solicitation clause enforceable – First applicant (“S”) claimed first respondent (“P”) solicited clients from S to new employer (“V”) –Employment agreement provided for client information to remain property of S – Authority found nothing turned on name change of employer from that in employment agreement – P claimed purchaser of S’s business (“R”) not in position to enforce restraint because of inability at law to assign personal covenant – Found proceeding brought by S not R – S claimed lost money on sale as consequence of default perpetrated by P and V in diverting clients from S to V – Respondents claimed if S sold business there were no clients to be solicited because clients now clients of R – Found R could not sue on restraint provision because personal covenant could not be assigned – Found S could not proceed against P because unable to show P diverted any client from employer’s business – Found employer had no business as business sold to R – Alternatively, found Authority would have little difficulty striking down non-solicitation clause because 24 month term excessive – Found P did not solicit S’s clients – GOOD FAITH – Applicants claimed P breached obligations of confidentiality – Found records of S not retained in P’s office – P claimed did not retain anything from involvement with S – Found P had no access to client lists as not retained in P’s office – Found P not in breach – COUNTERCLAIM – GOOD FAITH – P claimed S breached privacy – Found fair and reasonable employer would not disclose to third party terms and conditions of employee’s employment agreement (“EA”) without first obtaining consent – Found S provided R with details of P’s EA – Found not difficult to see how EAs of affected staff might be disclosed by one party to another during sale negotiations – Found S should have made sure R understood terms and conditions of employment of individual staff ought not be disclosed to third parties – Found breach inadvertent not deliberate – Found real breach occurred by R – Found S had duty to ensure information provided to third parties was treated with degree of confidentiality – UNJUSTIFIED DISMISSAL – Redundancy – Business sold to R and P’s position redundant – Applicants claimed grievance not raised within 90 days – Found P continued in employment beyond notice period – Found P should not be denied access to potential remedy of personal grievance because worked beyond notice period – Found P assumed would be offered employment with R – Found R later announced could not offer P position – Found P not determined on personal grievance course until after announcement – Found grievance raised in time – Found redundancy genuine as S sold business so unable to offer P continued employment – Found process adopted by S grossly defective – P not invited to meeting about possible redundancies – Found no consultation in respect of redundancy – Found no opportunity for P to have input into end of employment – Dismissal unjustified – REMEDIES – Found P only entitled to compensation rather than reimbursement of lost wages because redundancy genuine – Compensation appropriate for breach of privacy also – $6,000 compensation appropriate – Insurance Broker |
| Result | Application dismissed (restraint of trade) (good faith) ; Application granted (counterclaims) ; Compensation for humiliation etc ($6,000) ; Costs reserved |
| Main Category | Restraint of Trade |
| Statutes | ERA s4;Privacy Act 1993 |
| Cases Cited | Aoraki Corporation Ltd v McGavin [1998] ERNZ 601;Coutts Cars Ltd v Baguley [2001] ERNZ 660;Deloitte & Touche Group-ICS Ltd v Halsall unreported, Colgan J, 24 Jul 1997, AEC 74/97;Graphic Holdings Ltd v Dunne (1988) 2 NZELC 95;Kampen v New Zealand Business Telephone Co Ltd unreported, AM Urlich, 16 Jun 2004, AA 205/04;Peninsula Real Estate Ltd v Harris [1992] 2 NZLR 216;Post Haste Couriers Ltd v Casey unreported, Holland J, 24 Oct 1989, CP 83/89 |
| Number of Pages | 11 |
| PDF File Link: | 2011_NZERA_Christchurch_30.pdf [pdf 36 KB] |