Total RISC Technology Pty Ltd v Cannings

Total RISC Technology Pty Ltd brought a case against Cannings regarding the enforceability of a restraint of trade clause in Cannings' employment contract. Cannings, who was employed as an International Program Manager by Total RISC, resigned and immediately joined a second employer that conducted businesses which were considered to compete with Total RISC. The restraint of trade clause in Cannings' contract prohibited him from engaging in "any trade or business which directly competes with [Total RISC]" for six months post-termination. The court had to determine whether this clause was enforceable given Cannings' new role at the second employer.

The primary legal issues revolved around the interpretation of the restraint clause, specifically the phrase "any trade or business which directly competes with [Total RISC]". The court had to examine whether Cannings' new employment with a business that conducted activities similar to Total RISC's constituted direct competition, and thus fell within the scope of the restraint clause. Additionally, the court needed to consider whether the new employer's business operations were sufficiently distinct to avoid the restraint, and whether the activities Cannings was engaged in at the second employer constituted a different trade or business.

The court found that the phrase "any trade or business" in the restraint clause should not be interpreted narrowly based solely on the identity of the new employer but should consider the specific trade or business activity Cannings was engaged in. The court held that Managed Services, the division of the second employer where Cannings worked, constituted a separate trade or business, and Cannings' role there was different enough in its manner of operation to not directly compete with Total RISC's business. Although the end products were similar, customers were likely to perceive the differences in service delivery as significant. Therefore, the court concluded that Total RISC had not demonstrated that there was direct competition on the facts presented. Consequently, the proceedings were dismissed.