Judge questions restraint clause in Just Group defection case

A judge has questioned restrictions imposed on an executive at Solomon Lew’s Just Group who defected to a rival.

Just Group chairman Solomon Lew, right, with CEO Mark McInnes.

A restraint clause imposed on the former chief financial officer of Solomon Lew’s Just Group was so broad it would stop her working in the coal industry, a Victorian Supreme Court judge said today.

Justice Michael McDonald was hearing submissions from counsel for Just, Stuart Wood SC, on the opening day of what is expected to be a five-day trial in which the company seeks to stop Nicole Peck defecting to bitter rival Cotton On.

Just is a subsidiary of Mr Lew’s listed vehicle, Premier Investments.

Ms Peck’s contract contained a list of 50 brands — including Cotton On — for which she was barred for working for 24 months after leaving Just, but did not identify the company behind each.

Justice McDonald said that one of the competitors, Target, was owned by West Australian conglomerate Wesfarmers.

“Wesfarmers, they operate coal mines,” he said. “Your clause would have the effect of preventing Ms Peck from working in the coal mining industry.”

He said that if the clause prevented Ms Peck from working for companies that operated outside clothing retail, it would on the face of it go further than was reasonably necessary to protect Just’s interests.

Mr Wood said Wesfarmers ran Target through another company and it would be up to Ms Peck’s legal team to introduce evidence there was not an appropriate entity for which she could be restrained from working.

Justice McDonald also questioned whether the 24-month period was too long, pointing out that it could have been invoked even if Ms Peck had been sacked during her probationary period, a week after taking the job in January.

Mr Wood said he was “alive to the possibility your honour might find that a restraint of 24 months was too long”.

“That’s a possible outcome of these proceedings. But we’re opening this case on the basis that the confidential information that she received was so sensitive the 24 months restraint was justifiable.”

Mr Wood said Ms Peck had not told Just’s retail boss, Mark McInnes, the truth about meetings she had with Cotton On executives because she described a meeting with co-owner Michael Hardwick as a “general catch-up”, when he had actually offered her a job.

“Not only was that statement not accurate your honour, but it ignored the fact of the April 6 phone call with Mr Michael Hardwick, it ignored their conversation on the 12th of April where they discussed Ms Peck’s restraints ... it was completely untrue.”

He stressed Ms Peck was “indelibly fixed” with Just Group’s confidential information after being exposed to it at the highest level.

Just Group launched its action against Ms Peck in June after she told the company she was quitting to go to Cotton On.

Ms Peck had lasted just five months in the job.