Restraint of Trade: Informax International Pty Ltd v Clarius Group Limited (No 2)  FCAFC 7
Informax International Pty Ltd v Clarius Group Limited (No 2)  FCAFC 7
A recent decision of the Federal Court of Australia relating to an unfair restraint of trade clause in a contractor’s agreement has found that the Court may have the authority to retrospectively vary a contract. This finding may have a significant impact on employers, by making compensation payable for an employer’s conduct relating to a contract which was altered retrospectively.
The case of Informax v Clarius concerned an IT Project Manager, her personal operating company Informax, and an independent contractor’s agreement that it had with labour hire firm Clarius to provide services to Woolworths. The agreement contained a restraint clause which provided that Informax would not be permitted to contract directly with Woolworths for a period following termination of the contract. Upon termination of the agreement, Informax sought to contract directly with Woolworths.
The Court agreed that the restraint clause in the agreement with Clarius was “unfair or harsh” under the Independent Contractors Act 2006 (Cth) and amended the agreement to exclude the restraint provisions. This meant that Clarius was not able to enforce the restraints against Informax in contracting to Woolworths. Informax then applied to have the amendments to the agreement take effect retrospectively, thereby making it possible to apply for damages for breach of contract by Clarius, despite the conduct occurring prior to the Court’s amendment of the contract.
The Full Court allowed Informax to amend its Notice of Motion to rely on the varied provisions in the agreement in arguing its case. One of the primary reasons for this was because the Court had found the restraint provisions to be unfair. Such an order means that Clarius may be liable to pay Informax compensation in the range of $450,000 if the amended appeal is found in favour of Informax.
This case emphasises the importance of the terms to an agreement, and the impact terms may have on parties, even after the agreement has been terminated or come to an end. Employers should definitely monitor this case as a positive outcome for Informax may open the door to allowing compensation to be awarded if contracts are deemed to be “unfair or harsh” and amended retrospectively.