Hawkes Bay adviser Les Cunningham left AMP-owned Spicers in September last year, after 30 years in the financial advice sector.

His contract as an independent contractor, believed to be standard among many advisers, included two key restraint of trade clauses – a six-month “no dealing” clause that prevents an adviser offering any services to Spicers clients after cutting ties with the firm, and a perpetual “no soliciting clause” which requires that they never approach any Spicers clients – ever.

When Cunningham resigned, he told Spicers that he had legal advice that the clauses were unenforceable.

Between October and December, five of his former clients – many of whom had relationships of longer than 20 years with him - requested their investments be transferred to Cunningham at his new role with Forsyth Barr.

Spicers filed proceedings on December 18, and an injunction was issued, prohibiting Cunningham from soliciting former Spicers’ clients or providing services to them until February 7, when the order was due to expire.

Spicers said it was worried that he had become extremely active in approaching clients – something Cunningham emphatically denied.

When the case returned to court in January,  Cunningham acknowledged he had  limited dealings with former Spicers’ clients who requested advice from him.

He said he had changed his initial view that all aspects of the restraint of trade provisions were unenforceable, and he would comply with the no dealing restriction until March 13.

But he said the perpetual no soliciting clause was not enforceable.

Spicers conceded that the perpetual restraint was unlikely to be upheld as reasonable  - but wanted the injunction extended until it had the chance to amend the clause to a term of two years.

It said it was entitled to have it modified under the Illegal Contracts Act.

But, in a reserved decision, Justice J Dobson ruled in the High Court at Napier that the order that was to expire on February 7 would not be extended.

“I consider that Spicers’ attempt to enforce broadly prohibitions in perpetuity is likely to make it more difficult for it to obtain relief to recast the restraint within what are now claimed to be reasonable bounds. The Court should not be seen to be condoning any practice of contracting parties stipulating for draconian restraints on the basis that the court will come to their rescue on a fallback position to modify the contract after the event.”

An AMP spokeswoman said the decision to go to court was not made lightly. She said Spicers was taking further action.

“We have now commenced a process to seek a further ruling on the enforcement of the additional restraints outlined in the contract and compensation due to Spicers as a result of the breach of the restraints. As the matter is before the High Court, we are unable to comment any further on the matter.”

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This story was briefly published earlier this week. It was rmoved from site while Good Returns waited for comment from AMP, which is now included.