Woolworths Ltd v Olson

Case [2004] NSWCA 372


CITATION: WOOLWORTHS LIMITED v Mark Konrad OLSON [2004] NSWCA 372 revised - 20/10/2004
HEARING DATE(S): 6 October 2004
JUDGMENT DATE:
6 October 2004
JUDGMENT OF: Mason P at 1; McColl JA at 78; Bryson JA at 79
DECISION: Appeal upheld.
CATCHWORDS: Restraint of trade - employment contract - whether restraint contravenes public policy - whether capable of being read down to give reasonable operation - whether void for uncertainty - scope of injunction - restraint payment - Restraints of Trade Act 1976, s4. - (D)
LEGISLATION CITED: Industrial Relations Act 1996
Jurisdiction of Courts (Cross-Vesting) Act 1987
Restraints of Trade Act 1976
CASES CITED: J D Heydon, The Restraint of Trade Doctrine 2nd ed, 1999
Buckley v Tutty (1971) 125 CLR 353
Curro v Beyond Productions Pty Ltd (1993) 30 NSWLR 337
Geraghty v Minter (1979) 142 CLR 177
Harper v Candle Australia Ltd [2001] NSWIR Comm 77
ICT Pty Ltd v Sea Containers Ltd (1995) 39 NSWLR 640
Industrial Rollformers Pty Ltd & Anor v Ingersoll-Rand (Australia) Ltd [2001] NSWCA 111
Knogo Corporation v Halligan (1984) ATPR 40-460
Kone Elevators Pty Ltd v McNay & Anor (1997) ATPR 41-564
Littlewoods Organisation Ltd v Harris [1977] 1 All ER 1472
Nordenfelt v Maxim Nordefelt Guns & Ammunition Co Ltd [1894] AC 535
Orton v Melman [1981] 1 NSWLR 583
Queensland Co-operative Milling Association v Pamag Pty Ltd (1973) 133 CLR 260
Rouen v Ryan [2001] NSWCA 230
Ryan v Rouen [2002] NSWSC 468
Upper Hunter County District Council v Australian Chilling and Freezing Co Ltd (1968) 118 CLR 429
Woolworths Limited v Olson & Anor [2004] NSWSC 896
Woolworths Ltd v Mark Konrad Olson & Anor [2004] NSWSC 849
Wright v Gasweld Pty Ltd (1991) 22 NSWLR 317

PARTIES :

WOOLWORTHS LIMITED
Mark Konrad OLSON
FILE NUMBER(S): CA 40843/04
COUNSEL: Appellant: R M Smith SC/ M A Jones
Respondent: D Gardner (Solicitor)
SOLICITORS: Appellant: Clayton Utz Lawyers
Respondent: Maddocks Lawyers
LOWER COURTJURISDICTION: Supreme Court - Equity Division
LOWER COURT FILE NUMBER(S): SC 50116/04
LOWER COURT
JUDICIAL OFFICER :
Einstein J


                          CA 40843/04

                          MASON P
                          McCOLL JA
                          BRYSON JA

                          Wednesday 6 October 2004

WOOLWORTHS LIMITED v Mark Konrad OLSON


BACKGROUND

The Respondent was employed as an executive with the Appellant having managerial responsibility for a confidential project known as StockSMART. In this capacity he was part of a team developing a software system designed to transform Woolworths’ product supply procedures. On 5 July 2004 he gave notice of resignation to Woolworths and on 7 July signed a contract of employment with Franklins. On 12 July 2004 the Respondent was dismissed by Woolworths for breaching his contractual and fiduciary duties in relation to confidential information. On 2 July 2004 he had sent by email to his wife’s computer documents relating to the software project that were extremely confidential and valuable.

Clause 10 of the Respondent’s Service Agreement contained a restraint which, at Woolworths’ discretion and subject to paying a “restraint payment” equivalent to his contractual pay entitlements for the period…

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Details
AGLC
Woolworths Ltd v Olson [2004] NSWCA 372
Case
[2004] NSWCA 372
Decision Date

CaseChat Overview and Summary

Woolworths Ltd appealed to the Court of Appeal of New South Wales against a decision of the Supreme Court which had refused to grant an injunction to restrain Mr. Olson from acting in breach of a restraint of trade clause in his employment contract. The dispute concerned the enforceability of this clause, which sought to prevent Mr. Olson from engaging in competitive activities after his employment with Woolworths ceased.

The Court of Appeal was required to determine whether the restraint of trade clause was void for uncertainty, whether it contravened public policy, and if so, whether it was capable of being read down to give it a reasonable operation pursuant to section 4 of the *Restraints of Trade Act 1976* (NSW). The court also considered the scope of any injunction that might be granted and the implications of a restraint payment stipulated in the contract.

The Court of Appeal found that the restraint clause was void for uncertainty and, therefore, could not be enforced. Their Honours reasoned that the language used in the clause was too broad and imprecise to define the scope of the prohibited activities with sufficient clarity. Consequently, the court held that the clause was not capable of being read down under section 4 of the *Restraints of Trade Act 1976* to give it a reasonable operation. The appeal was upheld, and the orders of the Supreme Court were set aside.

Orders

Orders of the court

Appeal upheld.

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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