Miles v Genesys Wealth Advisers Limited

(2009) 201 IR 1; [2009] NSWCA 25

NSW Court of Appeal

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Interrogate

Catchwords

1. Contract
2. › Employment contracts
3. › Restraint of trade
4. › Post-employment covenants
5. › Construction of restraint clause
6. › Whether 'client or customer' included agents of employer
7. › Whether restraint period excessive
8. › Restraints of Trade Act 1976 (NSW), s 4
1. Equity
2. › Confidential information
3. › Restraint of trade covenants referencing confidential information
4. › Whether confidential information needed to be identified with precision
5. › Distinction between direct restraint on use of confidential information and restraint on employment by reference to potentiality for use
1. Contract
2. › Employment contracts
3. › Restraint of trade
4. › Reasonableness
5. › Legitimate business interests
6. › Customer connection as employer's property
7. › Period of restraint
8. › Relevance of arm's length negotiation with legal advice

Quick Take

Where a post-employment restraint is framed by reference to the potentiality for use of confidential information to the employer's detriment (rather than as a direct restraint on use), the employer need not identify the confidential information with the same precision required for equitable obligations of confidentiality or direct restraints on use. The DalySmith test — that a restraint cannot exceed the time for a replacement to demonstrate effectiveness — was disapproved as too restrictive. A 30-month restraint on a senior executive with 20 years of customer relationships, negotiated at arm's length with legal advice and for valuable consideration, may be reasonable.