Taking up employment with Canterbury real estate firm Bayleys was not in breach of a two-year restraint of trade written into their previous Open2view franchise agreement said photographers Paul Willetts and Rachel von Nordeck Meyers. The High Court refused an interim injunction blocking their continued employment with Bayleys, pending trial.
The High Court was told Willetts and Meyers Open2view franchise agreement came to an end in March 2019. It operated as a sub-franchise from Mainland Digital Marketing Ltd, controlled by Tim and Janetta Perry. Mr Willetts and Ms von Nordeck Meyers hold a minority interest in Mainland Digital. Their sub-franchising agreement entitled them to 55 per cent of gross revenue generated within the Canterbury franchise area. Bayleys was a major client. Having no agreement with the Perrys over their continuing a Open2view franchising relationship through Mainland Digital, they took up an offer of employment with Bayleys as in-house photographers; each receiving a base annual salary of $18,400 for twenty hours work per week.
The court was told they are left owed $69,000 unpaid by Mainland Digital. The fate of their 25 per cent stake in Mainland was left hanging. Mainland Digital sued, alleging employment with Bayleys breached a restraint of trade clause in their earlier sub-franchise agreement.
Courts frown on restraints of trade; they limit business activity. Wording of any restraint is closely examined. If there is any ambiguity, it is construed against the person seeking to enforce the restraint; the contra proferentem rule.
Justice Nation said there was no wording in the sub-franchise agreement that clearly prohibited Mr Willetts and Ms von Nordeck Meyers from providing photographic services as employees for a former Open2view client. Whether restraint wording indirectly prohibits such employment requires a full trial.
Mainland Digital Marketing Ltd v. Willetts – High Court (30.05.19)
19.105