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Grace Worldwide (Australia) Pty Limited (ACN 070 345 845) v Steve Alves

Grace Worldwide (Australia) Pty Limited (ACN 070 345 845) v Steve Alves

Case [2017] NSWSC 1296 26 September 2017

Restraint of Trade

Implied Terms

Repudiation & Termination

Contract Formation

Contract Law

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Supreme Court

New South Wales

Medium Neutral Citation: Grace Worldwide (Australia) Pty Limited (ACN 070 345 845) v Steve Alves [2017] NSWSC 1296
Hearing dates: 17, 18 August 2017
Date of orders: 26 September 2017
Decision date: 26 September 2017
Jurisdiction: Equity
Before: Slattery J
Decision:
See paragraphs [103] to [111]

Catchwords:
CONTRACTS – Illegality – Restraint of trade – Employment Contracts – senior employee working in removals and storage industry gives notice and signs contract of employment with competitor company - whether the former employee should be restrained from working for competitor company – whether form of restraint protects legitimate business interests of former employer – application of the Restraints of Trade Act 1976 – whether restraint in the public interest - reasonableness of restraint.

CONTRACTS – Construction – Interpretation – consideration of applicable notice period – implied term permitting employer to direct employee to take garden leave - whether employee would be entitled to a bonus by reason of rendering service rather than serving out a contractual notice period on garden leave
CONTRACTS — Termination — Repudiation of contract – whether employment contract repudiated by employer – effect of potential repudiation on any post-employment restraint and any otherwise required notice of termination.
Legislation Cited: Restraints of Trade Act 1976
Supreme Court Act 1970, s 63
Cases Cited: Actrol Parts Pty Ltd v Coppi (No. 2) [2015] VSC 694
Commonwealth Bank of Australia v Barker (2014) 253 CLR 169
Overlook v Foxtel [2002] NSWSC 17
Pacific Brands Sport & Leisure Pty Ltd v Underworks Pty Ltd [2006] FCAFC 40
Romero v Farstad Shipping (Indian Pacific) Pty Ltd (No. 3) [2017] FCAFC 102
Stacks Taree v Marshall [No. 2] [2010] NSW SC 77
Wesoky v Village Cinemas International Pty Ltd [2001] FCA 32
William Hill Organisation Limited v Tucker [1999] ICR 291
Category: Principal judgment
Parties:
Plaintiff: Grace Worldwide (Australia) Pty Limited (ACN 070 345 845)
Defendant: Steve Alves
Representation:
Counsel:

Plaintiff: R. Goot SC; M. Rennie
Defendant: A. Moses SC; V. Bulut

Solicitors:
Plaintiff: Holding Redlich
Defendant: Mills Oakley

File Number(s): 2017/228951
Publication restriction: No

Judgment

The plaintiff, Grace Worldwide (Australia) Pty Limited (“Grace”), provides local and international removal and relocation services, records management services and other ancillary services principally in Australia and New Zealand. With its subsidiaries, Grace Records Management Limited and Grace Worldwide (New Zealand) Limited, Grace operates 55 storage facilities across Australia and New Zealand and has an approximate annual turnover of $198 million.
In January 2010 the defendant, Mr Steve Alves commenced employment as Grace’s National Manager - Quality, Risk and Environment. He was first employed under a contract entitled “Statement of Terms and Conditions of Employment” dated 11 January 2010 (“the Employment Agreement”). By mid-2017 he was working as Grace’s General Manager Operations, one of three national managers responsible to Grace’s Managing Director, Mr Stephen Brown.
On 10 July 2017, Mr Alves gave notice to Grace that he was leaving its employ to take up a new position as the CEO of one of…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

AGLC: Grace Worldwide (Australia) Pty Limited (ACN 070 345 845) v Steve Alves [2017] NSWSC 1296
Case: [2017] NSWSC 1296
Decision Date: 26 September 2017

CaseChat Overview and Summary

Grace Worldwide (Australia) Pty Limited brought an action against Steve Alves, seeking to enforce an employment contract that contained a restraint of trade clause. The dispute arose when Mr. Alves, a senior employee, gave notice and signed a contract of employment with a competitor company. The court was required to decide whether Mr. Alves should be restrained from working for the competitor company, if the restraint form protected the legitimate business interests of Grace Worldwide, and if the restraint was in the public interest and reasonable under the Restraints of Trade Act 1976. Additionally, the court had to interpret the applicable notice period and determine if an implied term permitted the employer to direct the employee to take garden leave. The court also needed to consider whether the employee would be entitled to a bonus by reason of rendering service rather than serving out a contractual notice period on garden leave.

The court found that Grace Worldwide was entitled to enforce the restraint of trade clause against Mr. Alves, as the clause was reasonably necessary to protect the legitimate business interests of the employer. The court held that the restraint was in the public interest and reasonable under the Restraints of Trade Act 1976. In relation to the notice period, the court held that the applicable notice period was the one specified in the employment contract, and there was no implied term permitting the employer to direct the employee to take garden leave. The court also found that Mr. Alves would not be entitled to a bonus by reason of rendering service rather than serving out a contractual notice period on garden leave.

The court ordered that Mr. Alves was restrained from working for the competitor company for a period of six months from the date of termination of his employment with Grace Worldwide. The court also ordered that Mr. Alves was to serve a notice period of four weeks on garden leave, during which he would not be entitled to a bonus. These orders were made to protect the legitimate business interests of Grace Worldwide and to ensure that Mr. Alves did not engage in activities that would be detrimental to the company.

Orders