CONTRACT — Restraint of trade — Employer and Employee — Employer a consulting firm and the employee an IT consultant — Legitimate interest — Reasonableness of restraint — Duration — Scope — Severance — Clause unreasonable and void.
The respondent, Mr Pickett, worked for the appellant, Wallis Nominees (Computing) Pty Ltd (‘DWS’) as a consultant from July 2007 until February 2012. As a consultant Mr Pickett would be assigned to work with companies who had contracted with DWS and to supply them with services on DWS’ behalf. In February 2011 Mr Pickett was assigned to work with Grocon Pty Ltd (‘Grocon’). After working there for about 11 months, Grocon told Mr Pickett they were restructuring their IT department and offered him a job as the IT operations manager. Mr Pickett accepted the position at Grocon and resigned from DWS.
DWS sought to invoke the restraint of trade clause in Mr Pickett’s contract to prevent him from supplying services to Grocon, their now-former client. Ultimately, DWS brought proceedings against Mr Pickett. The learned trial judge found that if the restraint clause was valid, Mr Pickett would be in breach of it because of an overlap between the services being provided by Mr Pickett while employed at DWS and deployed at Grocon, and while employed by Grocon.
However, the learned trial judge held that the relevant restraint of trade clause in Mr Pickett’s employment contract was invalid and against public policy as DWS had failed to demonstrate that it had a legitimate interest in restraining Mr Pickett. His Honour also held that even if DWS did have such a legitimate interest, the restraint of trade clause would still be invalid because it did more than what was reasonably necessary to protect that legitimate interest. The clause was not reasonable in either its extent (extending as it did to clients with whom Mr Pickett had merely had a certain type of limited contact) or its duration. DWS now appeals the decision.
Background
The background to DWS’ business, Mr Pickett’s…
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.
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Details
AGLC
Wallis Nominees (Computing) Pty Ltd v Pickett [2013] VSCA 24
Case
[2013] VSCA 24
Decision Date
CaseChat Overview and Summary
Wallis Nominees (Computing) Pty Ltd sought relief against Pickett, an IT consultant who had breached a restraint of trade clause in his employment contract. The case was heard in the Supreme Court of South Australia. The primary issue was the enforceability of a restraint of trade clause in Pickett's employment contract with Wallis Nominees. This included the legitimacy of the employer's interest, the reasonableness of the restraint in terms of duration and scope, and the adequacy of the severance payment.
The court examined whether the restraint of trade clause was reasonable and enforceable, considering the employer's legitimate interest in protecting its business. The court found the clause to be unreasonable due to its broad scope and excessive duration, rendering it void. Additionally, the court addressed the issue of an argument presented on appeal that was not raised during the trial. The court considered whether such an argument could be entertained on appeal, applying principles from University of Wollongong v Metwally, Trans Petroleum (Australia) Pty Ltd v White Gum Petroleum Pty Ltd, and Banque Commerciale SA En Liquidation v Akhil Holdings Ltd. The court concluded that the argument could not be entertained as it was not raised at trial and would not serve the interests of justice.
The Supreme Court of South Australia found the restraint of trade clause to be unreasonable and void. The court also ruled that the argument raised on appeal, which was not presented at trial, could not be considered. The decision highlights the importance of raising all relevant arguments at trial and the court's adherence to the principle that arguments not run at trial will not be entertained on appeal unless exceptional circumstances apply.