Court of Appeal acts quickly to uphold espresso outlet restraint of trade
16 Mar 07Mr Hsieh was employed by Fuel Espresso Limited ("Fuel") as a barista in November 2005. He worked from the company's premises at Holland St in Wellington Central. Mr Hsieh's employment agreement included a restraint of trade prohibiting him from working for a competitor within a 100m radius of existing Fuel outlets for a period of 3 months following termination of his employment.
Mr Hsieh resigned on 7 January 2007 and on 15 January 2007 began working at a coffee cart for Beangrinding, a competitor of Fuel. The Beangrinding cart is 70m from the Holland St premises of Fuel.
Fuel sought an interim injunction from the Employment Court to enforce the restraint of trade. Judge Shaw decided the restraint of trade was reasonable but held that it was unenforceable as there was no "extra consideration" (payment) for the restraint.
Fuel appealed to the Court of Appeal. The Court of Appeal stated that the law does not require an extra "premium" for a restraint of trade clause and that the mutual promises in an employment agreement are consideration for each other. It said Mr Hsieh "left in face of a clear contractual provision preventing him from doing what he has done". The Court upheld Fuel's appeal and granted the interim injunction.
Mr Hsieh resigned on 7 January 2007 and on 15 January 2007 began working at a coffee cart for Beangrinding, a competitor of Fuel. The Beangrinding cart is 70m from the Holland St premises of Fuel.
Fuel sought an interim injunction from the Employment Court to enforce the restraint of trade. Judge Shaw decided the restraint of trade was reasonable but held that it was unenforceable as there was no "extra consideration" (payment) for the restraint.
Fuel appealed to the Court of Appeal. The Court of Appeal stated that the law does not require an extra "premium" for a restraint of trade clause and that the mutual promises in an employment agreement are consideration for each other. It said Mr Hsieh "left in face of a clear contractual provision preventing him from doing what he has done". The Court upheld Fuel's appeal and granted the interim injunction.
Source: Gareth Lewis
