| Restrictions | OK |
|---|---|
| Jurisdiction | Employment Relations Authority - Auckland |
| Reference No | [2011] NZERA Auckland 393 |
| Hearing date | 29 Oct 2011 - 9 Dec 2011 (3 days) |
| Determination date | 12 September 2011 |
| Member | Y S Oldfield |
| Representation | R Towner, N Van Der Sluis ; C Blake, S Van der Waal |
| Location | Auckland |
| Parties | Continental Car Services Ltd v Joyce and Anor |
| Other Parties | Gordon |
| Summary | BREACH OF CONTRACT – Applicant claimed respondents breached obligations of fidelity and confidentiality in employment agreements (“EA”) – Respondents resigned and employed by competitor and applicant claimed respondents planned to set up competitor while still employed by applicant – Applicant claimed respondents targeted applicant’s customers and solicited customers – Authority found respondents privy to confidential information – Found first respondent (“J”) sufficiently involved in restructuring proposal which was valuable information – Found part of respondents’ jobs to develop good relationships with clients – Found no first hand evidence to establish breaches during employment – Found failure to disclose intention to work for competitor did not amount to breach of duty – Applicant claimed second respondent (“G”) downloaded information from workshop computer – Found unable to conclude G downloaded confidential information to take away – Applicant claimed respondents misused confidential information relating to key client – Found competitor did not rely on information from respondents in setting prices or in deciding where to set up business – Authority unable to find respondents breached EAs – Applicant claimed J misused confidential information relating to courier driver client – Found no evidence to establish breach in relation to information about courier driver client – Applicant claimed J misappropriated company resources – Found J purchased brake pressure bleeder from supplier of automotive parts on applicant’s account – Found J misappropriated item – Found J directed junior staff member to arrange LSD unit be installed in J’s vehicle at applicant’s expense and without authorisation – Applicant discovered after J left that J inflated purchases in order to get vouchers as part of supplier reward scheme – Found applicant inflated sales and retained vouchers for personal use – Applicant claimed J misappropriated tools – Authority unable to conclude J misappropriated tools on limited evidence available – No award for damages made for damage to relationship with sales representative – Applicant sought special damages for costs incurred in preparation of solicitor’s letter to respondents – Special damages declined – RESTRAINT OF TRADE – Applicant claimed J breached terms of restraint of trade – Found restraint in place from outset of employment and agreed remuneration provided consideration for restraint – Found restraint should be limited to wider Auckland region as servicing not fully national business for applicant – Found unlikely recruitment for replacement would take six months or to build and consolidate customer relationships – Found reasonable restraint would be three months – Authority ordered EA to be modified accordingly – Found no evidence to support applicant’s assertions of solicitation – Found J breached restraint of trade by working for competitor within three month period in restraint provision – REMEDIES – Found applicant not liable for all business applicant believed lost from competitor – Found damages appropriate for loss of work J performed for competitor on applicant’s key client’s vehicle – $1,929 damages appropriate – PENALTY – No penalty awarded for breach of restraint of trade as breach minor – Applicant sought penalties in relation to four breaches relating to misappropriation – Found high levels of penalty appropriate due to deliberate dishonesty – $5,000 penalty appropriate in relation to each breach – COMPLIANCE ORDER – Applicant sought compliance with EA – Found although J breached restraint of trade clause, restraint period now well and truly over – Found no order for compliance needed – Service Managers |
| Result | Application dismissed (breach of contract) ; Applications granted (restraint of trade) (damages for misappropriation of items) (penalty) ; Damages ($1,929.04)(restraint of trade)(first respondent) ; Damages ($675)(LSD unit)(first respondent) ($471.66)(Brake pressure bleeder)(first respondent) ($3,600)(vouchers)(first respondent) ; Penalty ($20,000)(payable to Crown)(first respondent) ; Interest (8.4%) ; Costs reserved |
| Main Category | Restraint of Trade |
| Statutes | ERA s162;ERA Second Schedule cl11;Illegal Contracts Act 1970 s8(1);Judicature Act 1908 s87(3) |
| Cases Cited | BFS Marketing Ltd v Field [1992] 2 ERNZ 1105;Binnie v Pacific Health Limited [2002] ERNZ 438;Doherty Trading v Ferris [1999] 2 ERNZ 776;Fuel Espresso Ltd v Hsieh [2007] ERNZ 60;Manchester Property Care Ltd v O’Connor (No2) [1998] 2 ERNZ 305;Rooney Earthmoving Limited v McTague [2009] ERNZ 240 |
| Number of Pages | 29 |
| PDF File Link: | 2011_NZERA_Auckland_393.pdf [pdf 78 KB] |