Leighton v Teixeira (Restraint of Trade)

SUMMARY: An interim injunction is granted. By order of the Authority, Steve Teixeira is restrained from directly or indirectly carrying on or being interested in any capacity in any business that is similar to Concept Travel Limited’s business until 1 May 2023

In March 2017, Mr. Leighton acquired the business of Concept Travel from its previous owner. He and his wife have been the owners of the business since then, which operates as Ski Travel Specialists and specializes in selling ski packages and airfares to ski destinations worldwide. At the time, there were only three agencies and one travel broker operating in the ski travel industry, making it a niche and boutique market.

Mr. Leighton hired Mr. Teixeira in April 2017 as the manager and ski consultant. The two men had known each other for approximately 30 years, having worked together in the airline industry previously. On March 21, 2017, Mr. Teixeira was provided with a draft copy of his employment agreement, which included two post-employment restraint covenants: a 12-month non-solicitation clause, which Mr. Teixeira agreed to abide by through a consent order, and a six-month non-compete clause.

Despite raising issues with the agreement's terms and conditions, such as the start and finish time of work, flexible work hours, sick leave, and the three-month notice period, Mr. Teixeira raised no objections to the non-solicitation and non-compete clauses, which he signed on April 2, 2017.

In June 2021, Mr. Teixeira suffered a heart attack, which he attributed to the work-related stress and his working conditions at Concept Travel. In an effort to prioritize his health, he accepted an offer of employment from Amped, a direct competitor of Concept Travel, in September 2022.

On September 20, 2022, Mr. Teixeira informed Mrs. Paull-Leighton of his intention to resign, serving out his 90-day notice period, with his last day being December 16. Mrs. Paull-Leighton asked Mr. Teixeira where he was going, but he declined to say. The couple became concerned over time and reminded Mr. Teixeira of the restraint of trade clauses in his employment agreement with Concept Travel.

In his reply, Mr. Teixeira stated that he had made the decision to prioritize his health and had found a job closer to his home on the North Shore, but did not disclose the name of his employer. At the Concept Travel Christmas function on November 24, Mr. Leighton asked Mr. Teixeira directly where he would be working, but he refused to disclose it. The next day, Mrs. Paull-Leighton wrote to Mr. Teixeira to remind him of his post-employment obligations to the company and invited him to a meeting with her and Mr. Leighton.

Mr. Teixeira challenged the non-compete clause in his employment agreement, claiming that it was unenforceable. The law viewed restraints of trade as prima facie unlawful, but they could be justified if they were reasonable for both parties and in the public interest.

The reasonableness was determined at the time the agreement was made, and Mr. Teixeira never raised any objections to the clause at that time. During the interim stage of the proceedings, there was a factual dispute over whether Mr. Teixeira informed his employers of his intention to move to another company that could breach the non-compete clause. The judge found the six-month duration and scope of the non-compete clause to be reasonable, given the seasonal nature of Concept Travel's business.

The company was trying to protect its good will with customers who formed a special bond with their ski consultant. Mr. Teixeira argued that customers were loyal to the company, not the individual consultant, but the judge noted that the reasons why a customer may switch travel agencies were not always clear.

So, as of 31 January 2023, Steve Teixeira is forbidden from participating in any business similar to Concept Travel Limited until May 1st 2023. He must comply with the non-solicitation restraint outlined in his employment agreement with Concept Travel for a 12-month period ending on December 16th 2023