Cactus Imaging Pty Limited v Glenn Peters [2006] NSWSC 717

New South Wales Supreme Court

CITATION : Cactus Imaging Pty Limited v Glenn Peters [2006] NSWSC 717

HEARING DATE(S) : 16 June 2006

JUDGMENT DATE : 18 July 2006

JURISDICTION : Equity Division

JUDGMENT OF : Brereton J

DECISION : (1) Order that Defendant be restrained from directly or indirectly disclosing to any other person Plaintiff's confidential information as particularised, except as may be required by law. (2) Order that until 28 September 2006, Defendant be restrained from: canvassing, soliciting or endeavouring to entice away from Plaintiff any person who or which at any time during the preceding twelve months were or are clients or customers of Plaintiff or in the habit of dealing with Plaintiff; soliciting or endeavouring to entice away, for the purpose of being engaged within NSW in any business of the same nature as Plaintiff's business, any person who was as at 28 September 2005 a sales representative of the Plaintiff in New South Wales; and counselling, procuring or otherwise assisting any person to do any such act. (3) Order that Defendant pay Plaintiff's costs.

CATCHWORDS : RESTRAINT OF TRADE – Employer and employee – sales manager – confidential information – whether information relating to plaintiff's internal costs, pricing rates and parameters, marketing strategies, and features of special equipment is confidential – held, they are at least "know-how" of the quality that can be protected by a confidentiality covenant – Validity – whether restraint on solicitation of customers protects a legitimate interest of plaintiff in confidentiality of its pricing parameters and marketing strategies – held, it does - whether restraint also protects legitimate interest of plaintiff in customer connection - held, it does – Reasonableness – whether restraint excessive insofar as it prohibited dealing with customers other than those with whom employee personally dealt – where restraint on solicitation of customers is supported by protection of confidential information as well as by protection of customer connection - held, it can legitimately prohibit solicitation of existing clientele whether or not defendant serviced them and whether or not they were customers prior to defendant's departure - Duration – whether excessive – where restraint supported by legitimate interest in protection of whole of customer connection a significant proportion of which would take a year to establish relationship with replacement employee, and also in protection of confidential information which might remain useful for up to twelve months, and parties had agreed on twelve month restraint – held, 12 months is reasonable – Non-recruitment or anti-poaching covenant – covenant prohibits employee from soliciting other employees of plaintiff after his departure – whether a prohibition on recruiting desirable staff is a restraint of trade – held, it is – whether such restraint supportable by a legitimate interest of employer – held, it protects legitimate interest in confidential information, and also in staff connection - Restraints of Trade Act applied to limit scope of non-recruitment restraint.