RNTT Pty Ltd v Constable

Case [2014] SADC 78

DISTRICT COURT OF SOUTH AUSTRALIA

(Civil)

RNTT PTY LTD v CONSTABLE

[2014] SADC 78

Judgment of His Honour Judge Barrett

12 May 2014

CONTRACTS - GENERAL CONTRACTUAL PRINCIPLES - CONSTRUCTION AND INTERPRETATION OF CONTRACTS - IMPLIED TERMS - IMPLICATION OF MUTUAL OBLIGATION

TRADE AND COMMERCE - TRADE AND COMMERCE GENERALLY - RESTRAINT OF TRADE - RESTRAINT BY AGREEMENT - VALIDITY AND REASONABLENESS

The defendant was employed as a state manager by the plaintiff, a work recruitment company. The parties executed a Restraint Agreement that the defendant would not solicit the plaintiff's clients for 6 months following termination of his employment. While employed, during the 6 month restraint period and thereafter the defendant has worked on his own account for one, at least, of the plaintiff's clients. The plaintiff sought damages comprising monies the defendatnt received during his employment, during the restraint period and thereafter.

Held:

1)  The defendant breached his implied fiduciary obligation to the plaintiff, and the reasonable terms of the Restraint Agreement respectively by working on his own account during his employment and for 6 months after termination. The defendant must account for these monies and pay damages.

2)  The damages arising from the work done after the 6 months Restraint period are too remote. Damages not payable.

Concut Pty Ltd v Worrall (2000) 75 ALJR 312; Timber Engineering Co Pty Ltd v Anderson [1080] 2 NSWLR 488; JW Carter, Contract Law In Australia 6th ed 2013; Amaco Australia Pty Ltd v Rocca Brothers Motor Engineering Company Pty Ltd (1973) 133 CLR 288; Geraghty v Minter (1979) 142 CLR 177; Brightman v Lanson Paragon Ltd (1914) 18 CLR 331; Fitch v Dewes [1921] AC 158; Lindner v Murdock's Garage (1950) 83 CLR 628; A Buckle & son Pty Ltd v McAllister (1986) 4 NSWLR 426; Stewart’s Guide to Employment Law  2nd ed 2009; Smith v Nomad Modular Building [2007] WASC 169; Johnson v Perez (1988) 166 CLR 351; Hadley v Baxendale (1854) 9 EX 341; Pavey and Matthews Pty Ltd v Paul (1987) 162 CLR 221; Buckley v Tutty (1972) 125 CLR 353, considered.

RNTT PTY LTD v CONSTABLE
[2014] SADC 78

  1. The plaintiff sues the defendant for damages arising from a breach of his employment contract. The plaintiff is a labour hire company based in Adelaide, with an office in Queensland. Between 1994 and 28 July 2011 the defendant was employed by the plaintiff as its Queensland Regional Manager. The plaintiff alleges that while employed by the plaintiff, in contravention of his employment contract, the defendant undertook labour hire work for the plaintiff’s clients but on his own account. While employed by the plaintiff he received income for himself by servicing the plaintiff’s clients. The plaintiff seeks damages, first, for the monies received by the defendant from the plaintiff’s clients during his employment by the plaintiff.

  2. Second, the plaintiff seeks damages comprising income received by the defendant from the plaintiff’s clients for 6 months after…

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RNTT Pty Ltd v Constable [2014] SADC 78
Case
[2014] SADC 78
Decision Date

CaseChat Overview and Summary

In RNTT Pty Ltd v Constable, the plaintiff, RNTT Pty Ltd, brought proceedings against the defendant, Constable, alleging breaches of implied fiduciary obligations and a Restraint Agreement. The plaintiff claimed that the defendant, while employed and subsequently, worked on his own account in competition with the plaintiff and failed to adhere to the terms of a Restraint Agreement. The court was tasked with determining whether the defendant breached any fiduciary duties and the validity and enforceability of the Restraint Agreement.

The primary legal issues before the court were whether the defendant breached any implied fiduciary obligations during and after his employment, and whether the Restraint Agreement was valid and enforceable. The court needed to interpret the terms of the contract, assess the reasonableness of the restraint, and determine the appropriate remedy for any breaches. The court also had to consider whether the damages claimed were too remote to be recoverable.

The court found that the defendant indeed breached his implied fiduciary obligation by working on his own account during his employment and for six months post-termination. The court upheld the reasonableness of the Restraint Agreement, which stipulated that the defendant could not engage in competitive activities for a specified period. The defendant was required to account for the monies earned from the breach and pay damages to the plaintiff. However, the court ruled that damages for work done beyond the six-month restraint period were too remote, and therefore, the plaintiff was not entitled to recover those damages.

The court ordered the defendant to account for the monies earned from the breach of the implied fiduciary obligation and the Restraint Agreement and pay damages to the plaintiff. However, the plaintiff was not entitled to recover damages for work done after the six-month restraint period, as these damages were deemed too remote.

Orders

Orders of the court

1) The defendant breached his implied fiduciary obligation to the plaintiff, and the reasonable terms of the Restraint Agreement respectively by working on his own account during his employment and for 6 months after termination. The defendant must account for these monies and pay damages.

2) The damages arising from the work done after the 6 months Restraint period are too remote. Damages not payable.

Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

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