Restraint of Trade - Employment Relations Act 2000
Hearing Professionals Marlborough Ltd v Setz
31 Aug 2007, H Doyle, CA 107/07, (8 pages)
RESTRAINT OF TRADE - Applicant sought interim injunction to enforce restraint of trade - Respondent remained 49% shareholder of applicant - Restraint of trade provision prohibited involvement with competitor within 5 kilometre radius - Respondent went to work for competing business less than kilometre from applicant - Number of applicant’s patient’s transferred to competitor - Respondent contended action not genuinely directed at enforcing restraint, but being used to acquire her shares - Questioned whether any propriety interests remained to be protected as applicant not taking on new clients - Strongly arguable respondent’s new employment breached restraint provision, and arguable therefore that that motivated proceedings - Restraint arguably reasonable given respondent primary audiologist, had managerial role and substantial shareholding - Arguable proprietary interest in goodwill of business - Ongoing loss of patients meant long term damage not able to be assessed accurately - Damages not adequate alternative remedy for applicant but respondent’s lost salary could easily calculated - Respondent planned on taking maternity leave soon - Balance of convenience favoured applicant - Overall justice required interim injunction be granted - Respondent ordered to cease work at competitor until further order of Authority - Audiologist
Result: Application granted ; Orders accordingly ; Costs reserved
Rodwil Enterprises Ltd (previously t/a War Hair Design) v Dominguez & Anor
3 Sep 2007, R Arthur, AA 272/07, (16 pages)
RESTRAINT OF TRADE - Applicant alleged first respondent breached restraint of trade by providing hairdressing services to its former clients at second respondent, 50 metres away - First respondent prohibited from soliciting clients dealt with in preceding six months for three months after employment ended, or competing within three kilometre radius - Restraint reasonable, valid and enforceable - Subsequent agreement entered into by parties after employment ended put beyond any doubt first respondent’s acceptance of reasonableness of restraints - First respondent obliged to honour non-solicitation and non-dealing obligations - Whether respondent “dealt” with clients who followed him to new salon - Evidence established he provided services to clients covered by restraint and later agreement - Remedies - Future loss related to clearly defined period as applicant sold business - Revenue gained by second respondent appropriate measure of loss but revenue from services provided by other stylists to former clients excluded as evidence did not clearly establish respondent “dealt” with those clients - Twenty percent reduction to reflect client turnover - Claim against second respondent for aiding and abetting breach adjourned - UNJUSTIFIED DISMISSAL - Counterclaim - Whether dismissed or resigned - Applicant raised possibility of looking for new job with respondent's owners - Alleged told to finish work that day - Following day applicant sent letter purporting to resign - Appeared parties confused over meaning of conversation - English not applicant’s first language - Confusion over notice period misunderstood as direction to leave immediately - Authority not satisfied events comprised dismissal - COSTS - Length of investigation meeting less than one day - Costs of $1,500 reasonable - Hairdresser
Result: Application granted ; Damages ($3,012) ; Interest (10.76%) ; Counterclaim dismissed ; Costs in favour of applicant ($1,500)
