Personal
listings on LinkedIn and on webpages listing business directories do not amount
to “soliciting” in breach of a restraint of trade the High Court ruled refusing
Mike Pero (NZ)’s application for the arrest of a former Auckland franchisee.
Mortgage broker Mortgage Suite Ltd, owned
by Krish Krishna and Veena Rohini Krishna, surrendered its Mike Pero franchise
in June 2015. A restraint of trade
clause in the franchise agreement barred Mr Krishna from acting as a mortgage
broker anywhere for the next six months and then later from setting up a rival business
within Auckland.
The High Court was told Mr Krishna had
planned to set up as a mortgage broker as soon as the Mike Pero franchise
ended. Mr Krishna said he had initial
legal advice that the restraint of trade could not be enforced. Mike Pero (NZ) acted swiftly getting a High
Court injunction ordering Mr Krishna comply with the restraint of trade. This injunction was obtained without notice;
Mr Krishna got no notice of the court hearing.
Within months Mike Pero (NZ) was back in court
demanding Mr Krishna’s arrest saying he had breached the court injunction by
listing personal details on LinkedIn and on the Professional Advisers
Association’s website. This amounted to
“soliciting” for business, in breach of the restraint of trade, it said.
Justice Faire ruled internet listings do
not amount to soliciting for business.
With both listings, access to Mr Krishna’s details required an active
name search from a compendium of names on the sites. A listing did not amount to soliciting by Mr
Krishna. His listed personal details and
business history indicated an interest in a potential business relationship but
did not amount to a direct or indirect attempt to solicit business from Mike
Pero (NZ)’s client base.
Justice Faire also ruled Mike Pero (NZ)’s
without-notice injunction was too wide. It
purported to block Mr Krishna from acting as a mortgage broker anywhere
forever. The injunction can be enforced only
to the specific limits of the franchise restraint of trade, he ruled.
Mike
Pero (NZ) Ltd v. Krishna – High Court (10.06.16)
16.092