Janala Pty Limited v Hardaker (No 3) [2023] NSWSC 446

Janala Pty Limited v Hardaker (No 3) [2023] NSWSC 446

The restraints of trade in the contract of employment and Undertaking are not void as unlawful restraints where they protect legitimate interests (confidential information and customer connection), but the non-compete period should be read down to six months, as twelve months is excessive given the nature of the business, the role, and the time needed for the employer to protect its interests. The Undertaking is enforceable as a contract supported by consideration in the form of forbearance to terminate employment.

Jurisdiction
Australia
Judgment Date
02 May 2023
Procedural Posture
Principal Judgment / Final Judgment on Substantive Issues; Matter Listed for Directions Regarding Final Orders and Other Relief Claimed
Outcome
The restraints of trade contained in the relevant contract and binding undertaking are not void as unlawful restraints of trade; the length of the non-compete restraints in the undertaking should be read down from 12 months to six months.
Legal Topics
['restraint of Trade' 'employment Contracts' 'non Compete Clauses' 'confidential Information' 'goodwill' 'consideration' 'validity and Reasonableness of Restraint']
['equity' 'employment Law'] ['restraint of Trade' 'employment Contracts' 'non Compete Clauses' 'confidential Information' 'goodwill' 'consideration' 'validity and Reasonableness of Restraint']

Case Brief

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Procedural Posture

Principal Judgment / Final Judgment on Substantive Issues; Matter Listed for Directions Regarding Final Orders and Other Relief Claimed

Legal Issues

  1. 1 ['Whether the post-employment non-compete restraint in the contract of employment is void as an unlawful restraint of trade' 'Whether the Undertaking is binding as a contract on Mr Hardaker' 'If the Undertaking is binding, whether the non-compete restraints contained within it are void as an unlawful restraint of trade']

Ratio Decidendi

The restraints of trade in the contract of employment and Undertaking are not void as unlawful restraints where they protect legitimate interests (confidential information and customer connection), but the non-compete period should be read down to six months, as twelve months is excessive given the nature of the business, the role, and the time needed for the employer to protect its interests. The Undertaking is enforceable as a contract supported by consideration in the form of forbearance to terminate employment.

Court Disposition

The restraints of trade contained in the relevant contract and binding undertaking are not void as unlawful restraints of trade; the length of the non-compete restraints in the undertaking should be read down from 12 months to six months.

Orders

  • ['The non-compete and non-solicitation restraints are valid and binding for six months, not twelve months, post-termination; matter to be listed for directions on final orders and other relief.']