Restraint of trade clauses are often found in employment agreements and shareholder agreements. Their purpose is to protect business interests such as client information, intellectual property, employees and trade secrets. However, the extent to which a business can restrict an employee’s or a former director’s activities through such a clause is often contentious and can result in disputes.
What is a Restraint of Trade?
A restraint of trade clause in an employment contract applies when an employee leaves the organisation. Such restraint clauses can be enforced, but only to the extent that is ‘reasonably necessary’ to protect the legitimate interests of the business. Whether a provision is enforceable will therefore depend on the wording of the clause and the context of each case.
Restraint of trade clauses can be characterised as one of the following:
- Non-competition: to prevent a former employee from competing against the company.
- Non-solicitation: to prevent them from approaching the employer’s clients.
- Non recruitment: to prevent the former employee from recruiting other employees from the company.
- Confidentiality: to protect confidential information and trade secrets.
What is Reasonable Between the Parties?
If a restraint of trade clause is contentious, a court must determine what is reasonable in the context of the facts of your particular case. If the restraint clause goes beyond protecting the business’ legitimate interests to the former employee’s detriment, then a court will not enforce the clause. However, if the clause is reasonable to both parties, it is likely to be enforced.
What will a Court Consider when resolving a dispute?
In NSW, the Restraints of Trade Act 1976 governs the law surrounding restraints of trade. A court will consider a variety of factors in its determination of whether the restraint of trade clause is reasonable. Some of these factors include the:
- Negotiation and whether parties were able to negotiate any terms.
- Respective bargaining position of parties and whether parties were able to obtain legal advice.
- Nature of the business and the characteristics of the role of the employee.
- Remuneration and compensation for the restraint of trade.
- Duration and geographical area of the restraint.
If you are an employer, what can you do to protect your business?
To ensure that your business interests are protected in the event that one of your employees leave, it is vital that the restraint of trade clauses are effective and enforceable. Employment contracts should be reviewed regularly to ensure the changing nature of the employee’s current role and the changing nature of the business. The time period of the restraint, as well as the geographical area, must be reasonable to commensurate with the employee’s position. The clauses must be drafted properly and carefully so that, in the event that certain parts of the clause are found to be unenforceable, then the clause could be severed and the employer can rely on the balance of the clause when enforcing the restraint of trade. If you believe that your employment agreement does not adequately cover your legitimate business interests, you should seek legal advice from a competent employment lawyer.
An employer can only enforce a restraint of trade clause to the extent that it is reasonably necessary to protect their business interests. However, whether a clause is reasonably necessary will depend on the particular facts of the case, and in any dispute, it is best to seek professional legal advice. If you would like to discuss your employment law matter with a legal professional please contact us on (02) 9963 9800 or via our contact form.
If you are involved in a dispute that is brought before a court, you will require a litigation lawyer to protect your legal rights and present your side of the argument to maximise your chances of achieving a favourable outcome. Some clients find being involved in litigation both financially and emotionally stressful, so it’s important to find the right person to guide you through the process.
According to litigation lawyer Howard Scher, experience and specialisation don’t always make for a successful litigation lawyer. With four decades of front line courtroom experience, Scher believes that the most effective trial lawyers share these five key traits:
Credibility is the foundation of trust and the cornerstone of effective representation. It is a trait that is earned over time. When a credible lawyer speaks, people listen. The appointments and promises they make are kept. Effective litigation lawyers know that every move they make can potentially build or destroy their credibility, so they protect it at all costs.
Effective litigators understand that civility is a powerful tool in the art of persuasion. Litigation doesn’t have to be confrontational. Using hostile tactics that include volume, anger and intimidation undermine a lawyer’s long-term ability to persuade. It can draw attention away from key witnesses and facts, and in the case of settlements, it can harm a lawyer’s ability to negotiate in a reasonable manner with the opposition.
- Confidence in litigation
Litigation lawyers need to be able to think quickly on their feet without the benefit of an absolute certainty of the facts. This requires enormous levels of personal and professional confidence. The most effective litigators learn to translate mountains of structured and unstructured information into clear and decisive action, often in the heat of a trial. Confident lawyers radiate a sense of command that puts clients at ease and a positive energy that can help speed the course of trials and settlements.
Possessing an insatiable curiosity beyond law for a variety of topics leads to innovative approaches and solutions, while also keeping the job of litigating fresh and exciting. Life experiences in science, art, physics, psychology and even pop culture can provide unlikely solutions to courtroom problems. It can also provide the ability to communicate with judges in a more grounded manner.
- Competitive Spirit
Effective litigators take on every matter, large or small, with a warrior’s spirit. They thrive on the thrill of the challenge, not just the outcome. They consider beating their opponents as secondary to the pursuit of finding an elegant trial solution. Litigators with this trait are at their best when a case seems unwinnable. But like a warrior, they are respectfully persuasive, without being overbearing.
Etheringtons is committed to providing effective trial advice, so if you or someone you know would like more information, or requires litigation advice contact us today.
A binding financial agreement also commonly referred to as a ‘pre-nuptial agreement’ is an agreement which can allow for certainty, trust, and peace of mind in a relationship.
However, the High Court has made it clear in a recent case that it will not enforce any binding financial agreements as a consequence of unconscionable conduct, particularly when there is a significant power imbalance between the parties. Unconscionable conduct is defined to mean conduct which is so harsh that it goes against good conscience. A common instance is when an innocent party is subject to a special disadvantage which seriously affects the ability of the innocent party to make a judgment as to their own best interests.
What are Binding Financial Agreements?
Binding financial agreements are legally binding agreements that address what happens to a couple’s finances and property in the event that there is a break down in a marriage or de-facto relationship.
The Family Law Act 1975 is the relevant legislation which applies to binding financial agreements. Importantly, a binding financial agreement can protect assets including cash, property, superannuation and inheritances. However, in order for a binding financial agreement to be binding on the parties’, it is prudent that each party obtain independent legal advice, and the binding financial agreement must contain a statement from a legal practitioner.
Recent Case: Thorne v Kennedy
A recent High Court case has demonstrated that if a binding financial agreement is entered into in circumstances of unconscionable conduct, the agreement will not be upheld.
Thorne v Kennedy involved a binding financial agreement between a wealthy Australian property developer and his ex-wife.
The couple met online in 2006 on a website for potential brides. At the time, Ms Thorne was 36 years old, living in the Middle East with no substantial assets. Mr Kennedy was 67 years old and had assets in the vicinity of $18 million – $24 million.
Ms Thorne moved to Australia. Then, ten days before their wedding Mr Kennedy took Ms Thorne to a solicitor to obtain advice about the terms of a binding financial agreement which was purported to be entered into between them. The lawyer told Ms Thorne it was the worst agreement they had ever seen, and advised Ms Thorne not to sign it. Mr Kennedy told Ms Thorne that if she did not sign the agreement then the wedding would not go ahead. Despite the lawyer’s ‘advice, Ms Thorne signed the agreement and the wedding continued.
The couple separated in 2011 and Ms Thorne was provided with what the High Court described as a ‘piteously small’ lump sum payment based on the terms of the binding financial agreement. After lengthy legal proceedings, the High Court ruled that Mr Kennedy had taken advantage of his ex-wife’s vulnerability to obtain an agreement which was ‘entirely inappropriate and wholly inadequate.’ The agreement was entered into as a result of undue influence, illegitimate pressure and unconscionable conduct. As a result, the binding financial agreement was not enforceable and was subsequently set-aside.
Impact on Binding Financial Agreements in Australia
This ruling has been considered a landmark case in the interpretation of binding financial agreements in Australia. As a consequence of the Binding Financial Agreement being set aside, the Federal Circuit Court allowed Ms Thorne to bring a property settlement application against Mr Thorne.
This case serves to reinforce that binding financial agreements are not cheap documents and therefore appropriate advice and caution must be taken when entering into these agreements.
If you would like more information on how we can assist you with your binding financial agreement or any other family law matters, do not hesitate to contact us on 9963 9800 or contact us via the form here.
What is a Subpoena
A subpoena is a legal document issued by the Court, at the request of a party involved in court proceedings which involves requiring the subpoenaed party to either produce documents or give evidence at a hearing.
Subpoenas in the Family Court
In family law matters, proceedings can be held either in the Federal Circuit Court of Australia or the Family Court of Australia. During these proceedings, it may be necessary for a party to issue a subpoena for relevant information to be provided in Court. Ordinarily, it may be necessary to issue more than one subpoena in Court proceedings.
Subpoenas are generally issued when one party fails to provide all of the necessary documents to the court. Subpoenas are often issued to banks or superannuation funds for purposes of seeking production of financial material related to the other party. In parenting matters, an Independent Children’s Lawyer, a lawyer who acts for the children in parenting matters, will often issue subpoenas. This may be to the children’s schools and doctor if health issues have been raised. They may also issue a subpoena to either parent’s doctor, if necessary.
Filing for a Subpoena
In some proceedings, you must seek the court’s approval before issuing a subpoena. This is especially relevant when there are court orders in place or there are less than seven days before a hearing commences. In the Federal Circuit Court, there is a capping of no more than five subpoenas to be issued by each party, unless permission is granted by the Court. There is no restrictions imposed in the Family Court for subpoenas.
If you gain the court’s approval, the filing of the subpoena can proceed as normal. The original subpoena must be filed at the Federal Circuit Court or Family Court registry (depending which jurisdiction the matter is in). You must also file enough copies for one to be served on each party in the proceeding as well as the person or organisation being asked to produce material.
Importantly, the court can refuse the issuance of a subpoena if it finds that the subpoena amounts to a ‘fishing expedition’. That is, the deliberate attempt by one party to search or investigate with the hope of discovering information on the other party. Therefore it is important that when issuing subpoenas in family law, one must ensure that they are seeking information or documentation relevant to the current court proceedings.
A subpoena will incur a filing fee of $55.00 per subpoena.
Serving a Subpoena
Once the subpoena has been filed, it must be personally delivered (served by hand) to the person it is addressed to.
If you are serving a subpoena to a bank or financial institution, a small amount of money must be provided to the subpoenaed party. This is known as ‘conduct money’ for the production of documents. Some banks will charge a set amount, so it is important to find out what the production of documents may cost where possible. You also need to provide a copy of the court’s brochure with the subpoena.
Objecting to a Subpoena
A party is entitled to raise an objection to the issuance of a subpoena. A number of objections which can be raised involve:
- The documents requested are irrelevant
- The documents are privileged
- The terms of the subpoena are vague or non-specific
- Insufficient time given to comply with the subpoena
- Subpoena issued without a ‘legitimate forensic purpose’
- Insufficient conduct money
In order to do so, you have to file a Notice of Objection and the matter will subsequently be listed before the court for determination.
If you would like more information on how we can assist you with your family law matter, do not hesitate to contact us on 9963 9800 or via the contact form here.
Negligence occurs when one fails to take reasonable care to avoid causing damage to another person. It applies to both individuals and businesses. There are several factors that need to be satisfied for an individual or a company to successfully sue for negligence. These are:
- Duty of care;
- Breach of duty;
- Causation; and
Establishing a Duty of Care for Negligence.
A duty of care makes a person responsible for taking reasonable care to avoid harm being caused to another. It exists due to the characteristics of the relationship between the parties. It arises due to the nature of the parties’ relationship. For example, if one party has a substantial degree of control and/or reliance over the actions of another, a duty of care may exist. In this instance the party with greater control has a duty to take reasonable care with their actions so that no harm is caused to the reliant party. Examples include a teacher and a student, a legal professional and the client and a doctor and patient relationship. There are other common relationships which give rise a duty of care. These include the duty owed by a driver to other drivers on the road.
Standard of Care and Breach of Duty.
If a person owes a duty of care to another, a court will determine exactly what duties are owed. This is considered to be “the standard of care”. Under the Civil Liability Act 2002 a professional is held to the standard of their fellow professionals. For example, a doctor or an accountant would be held to the standard of doctors or accountants and what is widely accepted as competent professional practice.
In other instances, the standard of care is what a ‘reasonable person’ would do in the circumstances to ensure the possibility of harm is minimised. It helps to balance the rights of the parties by considering the level of care that is appropriate between the parties. If the standard of care is not met, then the person has acted in breach of their duty owed to the other person.
Damages and Causation.
For a person to be able to sue in negligence, harm as a consequence of the other person’s actions must be shown. Harm caused by negligence could be physical and/or mental. The onus is on the plaintiff to prove harm and that the defendant’s breach of duty has caused the harm. Further, there ought not to have been an intervening event. The court will ask: would the person have suffered harm ‘but for’ the actions of the other person.
Recent negligence case – collapsed balcony
The NSW Court of Appeal considered who was to blame for a collapsed balcony (Libra Collaroy Pty Ltd v Bhide  NSWCA 196).
In this case Bhides owned a residential property in Collaroy. Bhides appointed Libra Collaroy Pty Limited to manage the property. In 2012, a group of school children, including the daughter of the tenant, were on the balcony when it collapsed. There was a long history of complaints regarding the state and structural integrity of the balcony from the tenant. The tenant sued the landlord and the managing agent in the District Court of NSW. The agent and the landlord then issued cross claims against each other seeking an indemnity from the other and on the defendant for not locking access to the balcony given previous complaints and issues. At first instance, the District Court decided that the agent was 100% liable. The decision was appealed.
The Court of Appeal decided as follows:
- Judgment for the plaintiffs against the owners.
- Judgment for the owners against the agent.
- Any damages recovered by the owners from the agent to be reduced by 30%.
- Judgment for the agent against the tenant.
- The tenant is to contribute 20% to the agent’s liability to each of the plaintiffs.
- The owners and the tenant to pay the agent’s appeal costs.
- The agent and the owners to each bear their own costs of their cross claims in the District Court.
- The tenant to pay the agent’s cross claim costs in the District Court.
- The agent, owners and tenant are to respectively pay 50%, 30% and 20% of the plaintiffs’ costs.
We can gain the following from the Court of Appeal decision:
- That delegating to a managing agent will not form a defence to a claim for personal injury damages;
- That contractual indemnity may be excused where there is a contribution to the negligence of the other party (contributory negligence); and
- That a tenant who is on notice of a risk of harm may be found liable for negligence if the tenant could have taken steps to remove the risk.
As you can see from the Court of Appeal decision above, the law of negligence is not so straightforward and it is important that you seek legal advice from a competent litigation lawyer. If you believe someone has been negligent in their actions toward you or you are being sued for negligence, do not hesitate to contact one of our experience lawyers on 02 9963 9800 or at [email protected]. For more information, check out our blog here.
COVID-19 is impacting the operation of every facet of life and work around the world. There is no exception for the courts in Australia which have seen major changes to the procedure and operation of the court system. In this article, we explore how the Family Court in particular is dealing with the COVID-19 pandemic.
The Court has altered its operation in a variety of ways to ensure the health and safety of litigants and court staff and members.
The majority of court hearings and events will now be done remotely via a telephone or video conference. The Court has said that telephone appearance procedures will generally be most appropriate for the following:
- First Return Duty Lists;
- Directions; and
- Interim Hearings
The Court will notify the parties as to whether their matter is able to be dealt with remotely. If it is possible, the judge and court staff will be in the courtroom during the time of the listings. Interpreters may also appear by telephone, if required. The parties can attend by telephone or video conference in the comfort of their homes or office.
Once the Court has notified the parties of the requirement to attend court via telephone, a party may ask that the matter not be heard by telephone, due to it being impractical. They may also say that their matter is urgent and requires the parties to attend in person. In this circumstance, the matter may be adjourned or remain listed for a face-to-face hearing. However, the Court has strictly imposed a limit on the number of matters which will be dealt with in open court.
Changes to Everyday Operations:
There are a number of changes the Court has imposed as a result of the Covid-19 pandemic:
- Non-urgent matters may be adjourned to a future date (meaning postponed). This is at the discretion of the judicial officer.
- The registry services of the Court will be provided remotely via telephone or online services.
- In urgent circumstances, face-to-face interaction in a registry may be allowed, but only after an initial assessment.
- All documentation will need to be filed electronically through the online Commonwealth Courts Portal.
- For urgent matters (such as those involving domestic violence) which are held in court, matters will not be listed for more than 1.5 hours, and with sufficient time in between to allow cleaning of the court to occur.
- To reduce the length of any face-to-face hearing, where possible, hearings are to be complemented with written submissions or conducted via telephone, if necessary
Impact for Future Proceedings
If you are involved in current proceedings before the Court, there may be changes in the way your matter is dealt with. It is important to be prepared for changes in the way your matter runs and what form of communication will be utilised. If your matter is classified as ‘non-urgent’ you should be prepared for your matter to be potentially postponed for a period of time.
Further information relating to court operations and COVID-19 can be accessed from the COVID-19 updates and information page on the Family Court’s website.
Where Can I Find More Information?
It is important to be fully aware of the impact COVID-19 may have on your legal matter. If you would like further information, please do not hesitate to contact one of our experienced solicitors on 9963 9800 or via email at [email protected].
Etheringtons Solicitors extends our deepest sympathies to those experiencing hardship or health concerns during this difficult time. Further information about COVID-19 can be found at: www.health.gov.au.