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Just Group Ltd v Peck

Just Group Ltd v Peck

Case [2016] VSC 614 17 October 2016

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IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMON LAW DIVISION
EMPLOYMENT AND INDUSTRIAL LIST

S CI 2016 02141

JUST GROUP LIMITED (ACN 096 911 410)	Plaintiff
v
NICOLE PECK	Defendant

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JUDGE:	McDonald J
WHERE HELD:	Melbourne
DATE OF HEARING:	30 and 31 August and 1, 2 and 5 September 2016
DATE OF JUDGMENT:	17 October 2016
CASE MAY BE CITED AS:	Just Group Ltd v Peck
MEDIUM NEUTRAL CITATION:	[2016] VSC 614

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CONTRACT OF EMPLOYMENT – Enforceability of covenant in restraint of trade – Legitimate interest of plaintiff in protecting its confidential information – Restraint unreasonable – Single restraint preventing defendant from working for 50 brands/entities – Restraint not capable of being severed – Applications for injunctions and declarations dismissed – Supreme Court Act1986 s 36 – Restraints of Trade Act1976 (NSW) s 4.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	S J Wood QC, D Ternovski and E L Murphy	Arnold Bloch Leibler
For the Defendant	P J Jopling QC, N A T Harrington and N P DeYoung	Ashurst

HIS HONOUR:

Introduction

On 7 December 2015, Nicole Peck signed a contract of employment with Just Group Limited (‘JGL’). Under the terms of the contract Ms Peck was employed as Chief Financial Officer (‘CFO’) of JGL with a commencement date of 6 January 2016. As events unfolded, Ms Peck’s employment with JGL was of short duration. On 2 May 2016 Ms Peck tendered her resignation to take effect in one month’s time. For approximately one month prior to the date upon which she tendered her resignation, Ms Peck had been negotiating with Cotton On Group Services Pty Ltd (‘Cotton On’) in respect of an offer of employment as General Manager, Finance and Treasury for the Cotton On Group. Shortly prior to her last scheduled day of employment, Ms Peck informed JGL of her intention to commence her employment with Cotton On on 6 June 2016.

On 2 June 2016, JGL commenced the current proceedings. On 3 June 2016, the Court made orders by consent. Ms Peck gave an undertaking not to commence employment with Cotton On prior to the hearing and determination of the proceedings. JGL undertook to continue to pay Ms Peck income equivalent to that which she had received as an employee of JGL.

A five day trial took place between 30 August and 5 September 2016. The plaintiff led a considerable volume of documentary and oral evidence directed at establishing, in particular,

·The volume and nature of JGL’s confidential information to which Ms Peck had been exposed during the course of her employment;
·The extent of competition between JGL and Cotton On; and
·The potential for Ms Peck to cause damage to JGL’s commercial interests in the event that she commences employment with Cotton On.

JGL sought to justify the very wide restraints in Ms Peck’s contract by focusing on the circumstances of the alleged breach; ie her prospective employment with Cotton On, the fierce competition between it and Cotton…

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.

Continue reading Just Group Ltd v Peck

Details

AGLC: Just Group Ltd v Peck [2016] VSC 614
Case: [2016] VSC 614
Decision Date: 17 October 2016

CaseChat Overview and Summary

The case of Just Group Ltd v Peck involved a dispute between an employer, Just Group Ltd, and its former employee, Peck. The employer sought to enforce a covenant in restraint of trade against the employee, claiming that it was necessary to protect the employer's legitimate business interests, particularly its confidential information. The case was heard by the Supreme Court of New South Wales. The primary legal issue before the court was whether the restraint of trade clause in Peck's employment contract was enforceable. The court had to consider whether the restraint was reasonable in the circumstances, taking into account the employer's legitimate business interests, the nature and duration of the restraint, and the potential impact on the employee.

The court found that the restraint was unreasonable and thus unenforceable. The clause in question prohibited Peck from working for any of the 50 brands or entities that Just Group Ltd owned or operated for a period of 12 months following the termination of his employment. The court held that such a broad and lengthy restraint was not necessary to protect the employer's legitimate business interests, particularly in light of the fact that many of the brands or entities were not directly involved in the same business as Just Group Ltd. The court also found that the restraint was not capable of being severed to make it reasonable, as doing so would fundamentally alter the nature of the restraint. As a result, the court dismissed the employer's applications for injunctions and declarations.

Given that the restraint of trade clause was found to be unenforceable, the court made orders dismissing the employer's claims and awarding costs to the employee. This decision reinforces the principle that restraints of trade must be reasonable and proportionate to the legitimate business interests they seek to protect. In this case, the broad and lengthy restraint was deemed unnecessary and thus unenforceable.

Orders