Burton & Eising v. Wright Trading Pty Ltd

Burton and Eising brought proceedings against their employer, Wright Trading Pty Ltd, seeking to establish that the employer had repudiated their employment contracts and to have a restraint of trade clause in their contracts declared void or, at least, limited in its scope. The dispute arose out of the termination of an agreement between the employer and a third party, ABN Amro Morgans, under which the employer had been operating. The employer sent a memo to the applicants on 16 August 2006 advising that the agreement would not be renewed when it expired on 31 January 2007 and that staff leave was cancelled until further notice. The applicants claimed that this constituted a fundamental breach of their employment contracts and they purported to accept the employer's repudiation of those contracts. The employer denied that it had repudiated the contracts but accepted the applicants' purported repudiation as valid. The restraint of trade clause in the applicants' contracts limited the areas in which they could work and the time for which they could not compete with the employer. The applicants claimed that the restraint clause was unreasonable and void in its entirety. The court found that the employer had not repudiated the contracts, but if it had, the applicants would not have been entitled to terminate the contracts. The court considered that the restraint of trade clause was valid only insofar as it prohibited the applicants from using confidential information for six months from 26 September 2006. The court also found that the employer had obtained privileged documents inadvertently and was restrained from using them.