RBM Plastic Extrusions Pty Ltd v Diaz

The dispute in RBM Plastic Extrusions Pty Ltd v Diaz concerned a restraint of trade clause in an employment contract. RBM Plastic Extrusions Pty Ltd, the employer, sought to enforce a non-compete clause against their former employee, Diaz, who had left to start a competing business. The Federal Court of Australia was tasked with determining the enforceability of the restraint and the appropriate remedy.

The central legal issues before the court were whether the restraint of trade clause was reasonable and whether it protected a legitimate interest of the employer. The court had to consider the nature and duration of the restraint, the existence of a customer connection, the protection of confidential information, and the potential for injunctive relief. Specifically, the court had to decide if the restraint period was excessive given that it would extend beyond the duration of the employment, and whether a perpetual injunction would be available to enforce the restraint.

The court found that the restraint was not reasonable because the period of restraint would exceed the duration of the employment, rendering it excessive. The employer's legitimate interests in protecting customer connections and confidential information were acknowledged, but these were not sufficient to justify the unreasonable duration of the restraint. The court also concluded that a perpetual injunction would not be appropriate and instead, the employer was entitled to an interlocutory injunction for an appropriate duration. The "springboard" doctrine, which allows for an injunction to prevent the misuse of skills or information acquired during employment, was considered but not sufficient to extend the duration of the restraint beyond what was reasonable.

The court ordered that an interlocutory injunction should be granted for a period that adequately protected the employer's legitimate interests while being reasonable in duration. The specifics of the duration were left to be determined through further proceedings.