In Network Ten Pty Limited v van Onselen  NSWSC 829, his Honour Judge Hammerschlag CJ considered the operation of a non-disparagement clause in a Deed of Release (the Deed) between Network Ten Pty Limited (Ten) and its former employee, Dr Peter van Onselen. The Deed contained a non-disparagement clause under which both parties agreed not to disparage the other, or make any statement or publication, or authorise any other person to disparage, or make any statement or publication which may, or which does in fact, bring the other into disrepute or ridicule, or which may otherwise adversely affect their respective reputations.
Following execution of the Deed by both parties, Dr van Onselen wrote an article published in The Australian Business Review section of The Australian. By that article, Dr van Onselen made a number of comments and observations regarding the financial performance and long term viability of Paramount, Ten’s US parent company. Ten subsequently brought an action for breach of the Deed and submitted that the article by Dr van Onselen disparaged Ten. Ten sought a declaration to that effect and an injunction further restraining Dr van Onselen from disparaging Ten, its related bodies corporate, and each of their respective officers and employees.
Legal representatives for Dr van Onselen conversely argued that the non-disparagement clause was not intended to be so widely construed such that it captured any statements by Dr van Onselen that would have the effect of disparaging, or bringing Ten into dispute or ridicule, or adversely affecting its reputation. The following submissions were made on behalf of Dr van Onselen:
The intention of the non-disparagement clause was to stop negative commentary by Dr van Onselen about his employment, or commentary about Ten as an employer or the circumstances in which his employment was terminated;
As an alternative, the non-disparagement clause was a restraint of trade within the Restraints of Trade Act 1976 (NSW) (the Act) and invalid because it was against public policy; and
Ten’s construction of the non-disparagement clause curtailed his right of free speech and as a journalist, impacted his professional occupation.
His Honour did not accept the third ground and determined that argument to be untenable, finding that Dr van Onselen had not bargained for that right. His Honour ultimately found that Ten’s construction of the Deed was the correct one and made a declaration that Dr van Onselen had breached the Deed in authoring the article but did not grant the injunction sought by Ten. His Honour also held that the non-disparagement clause, on proper construction, was not a restraint of trade clause within the meaning of the Act.
This case is a reminder of the importance of ensuring that non-disparagement and restraint of trade clauses are carefully drafted such that any intended construction by either party can be given full effect. As envisaged above, non-disparagement clauses protect the reputation of individuals as well as the good will and reputation of companies and organisations. It is often the case though that parties entering into agreements or deeds initially overlook the extent of the operation of non-disparagement and restraint of trade clauses. As such and given the utility of these clauses in protecting reputations and maintaining confidential information, they often become a substantial source of dispute and litigation.
Our solicitors at BlackBay Lawyers are highly experienced and skilled in the field of commercial and employment law and have extensive experience in drafting non-disparagement and restraint of trade clauses. If you are entering an agreement or deed of release, or wish to seek advice surrounding the operation of any non-disparagement and/or restraint of trade clauses, please feel free to contact BlackBay Lawyers on 02 9100 0889 or via www.blackbaylawyers.com.au for a confidential discussion with one of our solicitors.
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