March 2022 - McCaw Lewis

Tova O’Brien v Discovery – Restraints of Trade and Learnings from a High-Profile Decision

Posted on March 22, 2022March 19, 2026 by au_common_admin

Tova O’Brien’s Restraint of Trade found enforceable

Many employment agreements contain restraints of trade. Some restraints may be enforceable, and some completely unreasonable. This article explores the recent high-profile decision of the Employment Relations Authority in O’Brien v Discovery NZ Limited and the general position regarding restraints of trade.

Background

As TV3’s Political Editor, Tova’s employment agreement stipulated she could not take any role with any competitor nationally for 3 months, and contained a six month non-solicitation and non-dealing clause. TV3’s owner, Discovery NZ “Discovery” justified this restraint in the agreement by stating “we naturally wish to protect our business relationships and our confidential information.”

Arguments

Tova’s counsel argued the restraint was unenforceable as she was taking a role that would not directly compete with her prior role. Tova’s role with Discovery was in television, predominantly presenting in the 6.00pm timeslot. In her projected move to MediaWorks, she would occupy a morning timeslot over radio. Tova asserted that she would not be directly competing with her prior role, and since Discovery did not have any radio shows or presence on that media, she would not be competing with Discovery’s television presence in the mornings as the commuter audience that radio attracts would not usually be in a position to watch television.

Discovery disagreed, claiming that the terms of restraint were not related to Tova’s role – they related to her being “key on-air talent” for Discovery, and going to a competitor (MediaWorks) and being “key on-air talent” for them. The Employment Relations Authority agreed with Discovery’s assertion that Newshub’s AM Show will be competing against Tova’s new radio show for audiences and attention, which brings about significant advertising revenue.

Decision

The Authority ruled that Discovery’s proprietary interests (advertising revenue and Tova’s political sources in Parliament) were reasonable and capable of protection, and therefore found the restraint enforceable. However, the Authority did consider the restraints too broad, and lessened her non-compete restraint to seven weeks, and her non-solicitation and non-compete restrictions to three months.

The Authority also ordered Tova to pay $2,000 to Discovery for breaching her conflict of interest clause by undertaking promotional activity for MediaWorks while she was still employed by Discovery.

The Default Position – Restraints of Trade

Restraints of Trade exist to protect employer’s proprietary interests, trade secrets and business connections. They cannot be unreasonable to the point they do not achieve those means, or are unreasonably restrictive and unfairly prevent an employee from making a living.

The default position is that restraints are unenforceable, and employers need to prove that the restraint is necessary to protect their tangible proprietary interest, without unreasonably restricting their employee’s ability to make a living, or preventing healthy competition in the market. In determining enforceability, there are multiple considerations including the seniority of the employee, the nature of the industry they are in, and the level of confidential information or the trade contacts they have access to.

Going Forward

The restraint in O’Brien v Discovery NZ Limited is certainly not your average restraint of trade. Tova is a high-profile individual, who brought in considerable advertising revenue and had multiple parliamentary sources that Discovery were trying to protect their proprietary interests in.

The biggest lesson from this case is to avoid the assumption that employers will not try to enforce restraints of trade. This case also dives deep into the facts of the matter, and reinforces that the enforceability of any restraint will be very fact-specific and differ on a case-by-case basis.

If you have concerns regarding the enforceability of a restraint of trade in your Employment Agreement, or wish to enforce a restraint of trade, we recommend getting in touch.

Employment Law Assistance

Our Workplace Law Team are able to assist with employment matters relating to restraints of trade, and provide guidance on plausible restraints and potential enforceability concerns.

Chantelle is a Solicitor in our Workplace Law Team. She can be contacted on 07 958 7473 or chantelle.tyler@mccawlewis.co.nz.

Can I Enforce a Contract with Someone Who Has Died?

Posted on March 15, 2022March 19, 2026 by au_common_admin

A contract can be enforced against a deceased’s estate. It is still a valid agreement even if the other party has died, provided they did not need to be alive to perform the contract (for example, an employment agreement).

In most cases you will have remedies under the contract and general law.

If, because of the death of the other party,:

the contract cannot be performed: the contract may be frustrated by circumstances beyond the parties’ foresight and ability to control. You should check the contract to see if it deals with such a situation.
the contract is breached: there are potential remedies such as damages, specific performance or in some circumstances a Court ordered injunction.

You should have your lawyer find out who is acting for the deceased’s estate and see what your options are or whether the contract can still be performed.

Example

Mr Jones is selling his house. Ms Mable makes a suitable offer to Mr Jones.

The offer is accepted and goes unconditional. Unfortunately, Mr Jones dies of a heart attack before settlement. Ms Mable really wants to buy the house.

Can the contract be performed?

Yes, but settlement will be delayed. Mr Jones’ executors must obtain probate of his will before the property can be transferred to the executors and then to Ms Mable. If Mr Jones did not have a valid will, then letters of administration will have to be granted before the property can be transferred to the administrators and then transferred to Ms Mable), which is a longer process.

If you have questions about enforcing a contract against an estate, our Disputes Resolution Team are able to assist you.

If you would like further information, please contact Daniel Shore on 07 958 7477.

Have You Set Up a Trust During Your Marriage/Civil Union?

Posted on March 1, 2022March 19, 2026 by au_common_admin

Trusts in New Zealand are incredibly common, particularly family trusts. When relationships breakdown the Property (Relationships) Act 1976 has some limited provisions to address dispositions to trusts.

However, if you have been married or in a civil union, there is a much more powerful tool that may apply – Section 182 of the Family Proceedings Act 1980 (“Section 182”).

Section 182 has a wide application, which includes to family trusts. This article focuses on this aspect of Section 182.

The Purpose

The purpose of Section 182 is to remedy the consequences of the failure of a trust’s premise of a continuing marriage/civil union.

This essentially means that when the trust was set up it was based on the relationship not ending. If the relationship has ended then injustices may arise, such as one person benefiting over the other due to the change in circumstances, therefore Section 182 empowers the Court to look into the trust and make orders to ensure justice between the parties is achieved.

Requirements

For Section 182 to apply:

Firstly, there must have been a marriage or civil union. This explicitly excludes defacto couples, which differs from the position under the Property (Relationships) Act 1976. There does not need to be children of the marriage/civil union however the interests of children, particularly dependent children, are especially important.
Secondly, the Court must have made an order dissolving the marriage or civil union, which first requires the couple to have been living apart for two years.
Thirdly, the order must have just been made or made within a “reasonable time”. What constitutes a reasonable time will be highly fact specific, but it is important not to delay.
Lastly, there must be the existence of “any agreement between the parties to the marriage or civil union for the payment of maintenance or relating to the property of the parties or either of them, or any ante-nuptial or post-nuptial settlement made on the parties,”. This last element being the most complicated.

The most common use of Section 182 is to nuptial settlements, with family trusts being the most common nuptial settlement. To be considered a nuptial settlement requires a trust to make continuing provision for one or both of the parties, such as through their status as beneficiaries, and there must be a connection between the trust and the marriage/civil union.

Where a trust has been settled during a marriage/civil union, with one or both parties as beneficiaries, it will almost inevitably be considered a nuptial settlement.

Whether a trust settled prior to the marriage/civil union will be a nuptial settlement is more difficult to determine. Where such a trust is not a nuptial settlement when it is settled, then dispositions to that trust of property during the marriage/civil union may make that trust a nuptial settlement in respect of that specific property.

What is clear however is that the Court is giving a generous approach to the meaning of nuptial settlement.

If all the four above elements are present an application can be made to the Family Court. The Court then has a wide discretion to make orders under Section 182.

Exercising the Discretion

The Test – Whether the Court Should Exercise its Discretion

The Supreme Court has set out a test to apply (refer to Clayton v Clayton [2016] NZSC 30). The Court will compare the position of the parties under the trust assuming a continuing marriage/civil union, with the position of the parties under a dissolved marriage/civil union.

Factors that are relevant to the exercise of the discretion are not exhaustive but can include the terms of the trust and how the trustees are exercising, or are likely to exercise, their powers in the changed circumstances. The manner in which the trustees would have exercised their discretion assuming a continuing marriage/civil union is relevant. It is significant who established the trust and the source and character of the trust’s assets. Particular attention must be paid to dependent children. While need is not a prerequisite it may also be taken into account, as well as the parties’ expectations. The length of the marriage/civil union can also be relevant, as is the existence of any other beneficiaries.

One matter to note is that Section 182 cannot be used to defeat or vary any agreement entered into under Part 6 of the Property (Relationships) Act 1976 – the contracting out provisions – unless the interests of the children of the relationship require it. However, the mere existence of a contracting out agreement is not determinative as there must be a sufficient connection between the trust and the agreement.

The Remedy – How the Court Should Exercise its Discretion

Unlike the Property (Relationships) Act 1976, the starting point is not a 50/50 split.

In line with the purpose of Section 182 and the above test, an assessment of the likely position under the trust assuming the marriage/civil union had continued is undertaken and then compared with the likely position following the dissolution of the marriage/civil union. A remedy that can best minimise the negative impact of the failure of the trust’s premise of a continuing marriage/civil union is then implemented.

Remedies can include the trust being split into two separate trusts, payment of a sum to one party, the trust purchasing property for the use of one party, the trust deed being varied, removal and appointment of trustees or a combination. The Court has a wide discretion so the remedy can be appropriate to the specific circumstances.

Conclusion

Section 182 is a powerful tool, particularly in respect of family trusts settled during a marriage or civil union.

The experienced team at McCaw Lewis can help you navigate any aspect of your relationship property matters, including the application of Section 182, or answer any questions you may have.

Zane is an Associate in our Disputes Resolution Team and can be contacted on 07 958 7431.

Month: March 2022