Portal Software v Bodsworth

Portal Software brought an action against Bodsworth, an ex-employee, for breach of contract and breach of confidence. The dispute centred on a non-compete clause in Bodsworth’s employment contract that restricted him from contacting or dealing with any former clients for six months following his departure from the company. The case was heard in the Supreme Court of Victoria.

The court had to decide whether the restraint of trade clause in the employment contract was excessive, unreasonable, and therefore void. The key issues included whether the restraint was contrary to public policy, whether it was justified by special circumstances, and whether it was reasonable given the interests of both parties. Another issue was determining the exact date from which the restraint was triggered and whether the employer’s action in excusing Bodsworth from further attendance accelerated the end of his employment.

The Supreme Court found that the restraint clause was neither excessive nor unreasonable. The restraint was deemed necessary to protect Portal Software’s confidential information and was not unreasonable in the public interest. The court concluded that the restraint was valid as it was judged at the time the contract was made, and the trigger for the restraint was the termination of employment rather than the cessation of attendance. The court held that the restraint clause was reasonable and enforceable. Therefore, it was not necessary to refer to the Restraints of Trade Act. The court also ruled that there was no basis to extend the contractual restraint beyond the agreed term.

The court ordered Bodsworth to pay damages to Portal Software for breach of contract and breach of confidence. Additionally, the court upheld the restraint of trade clause as reasonable and enforceable within the terms agreed upon by the parties.