case_text: This, the applicant said, was because in order to comply with s 441(6) of the Act a notice must describe the nature of the industrial action with sufficient particularity to enable an employer to take appropriate defensive action: Davids Distribution Pty Ltd v NUW [1999] FCA 1108 ; (1999) 91 FCR 463 at 494-5. 80 There are, according to the applicant, two difficulties with the Protected Action Notice. Firstly, the Notice of Action states: The employees to whom this notice relates are those employees of CSBP Limited who are members of the LHMU, who would be subject to the proposed collective agreement dealt with in bargaining period BP2007/8 and work as process technicians. 81 The applicant contends that it is ambiguous as to whether some or all of the process technicians, who are members of the respondent, are intended to take the threatened industrial action. 87 The applicant referred to Adelaide Brighton Cement v AWU [2002] FCA 601 , when faced with similar issues, von Doussa J, after considering Davids Distribution noted at [18]: The degree of specificity in a notice sufficient to enable the employer to take appropriate defensive action must be judged against the nature of the employer's undertaking and the way in which that undertaking operates. In that case, as here, the employer operated 12 hour day and night shifts and was left not knowing at what time on what day it would need to allocate labour to maintain its operations. His Honour found there was a serious question to be tried that the notice of industrial action failed to meet the requirements of s 170MO(5) (now 441 (6) of the Act ). 92 I am satisfied that there is a serious question to be tried that the Protected Action Notice does not adequately state the nature of the intended action and was therefore not a valid notice. In Davids Distribution Pty Ltd v NUW , Wilcox and Cooper JJ (with whom Burchett J agreed on this point) said of then s 170MO(5), which was in the same terms as s 441(6) of the Act : 84. . . . Parliament did not indicate what degree of specificity it intended by the term "nature of the intended action". To interpret this term, on the one extreme, as requiring no more than an indication of industrial action, as argued by NUW, would be significantly to devalue s 170MO(5); the notice would provide little information. To interpret it, on the other extreme, as requiring precise details of every future act or omission would be to impose on the giver of a notice an obligation almost impossible to fulfil. Industrial disputes are dynamic affairs. Decisions as to future steps often need to be made at short notice, sometimes in response to actions of the opposing party or other people, including governments, and changing circumstances. It would be a major, and unrealistic, constraint on industrial action to require a party to specify, three clear working days in advance, exactly what steps it would take. An unduly demanding interpretation of s 170MO(5) would seriously compromise the scheme of Div 8 of Pt VIB of the Act ; it would be difficult for a party to an industrial dispute to obtain the protection contemplated by the Division . ... 87. We think s 170MO(5) was designed to ensure that industrial disputants who are to become affected by protected action, in relation to which their usual legal rights are significantly diminished, are at least able to take appropriate defensive action. For example, an employer may operate a sophisticated item of equipment that will be damaged if precipitately shut down. If warned in advance of a ban that might affect the continued operation of that plant, the employer might choose a controlled shut down during the period of the notice. More commonly, perhaps, an employer might use the notice time to communicate with suppliers and customers, and thereby reduce the consequences for them of the notified industrial action. Very often, the recipient of the notice will respond in a way that has a legal dimension. For example, a union might react to a notice by an employer of intent to lockout some employees by giving notice that all employees will strike indefinitely as from the commencement of the lockout. Similarly, an employer might respond to an employees' notice of bans by giving notice of a lockout of some or all employees. 93 The appropriate defensive action referred to by von Doussa J in Davids Distribution Pty Ltd included, by way of example, the shutting down of a sophisticated item of equipment, although in the context of potential damage to the equipment if precipitately shut down. In this case, whatever be the consideration concerning damage to the plant, there are very substantial safety issues concerned both with the shutting down of the plant safely but also in monitoring the plant whilst it is shut down: see the Woodside Petroleum and Burswood Resort cases referred to above. Arguably the Protected Action Notice should have specified the Process Technicians, if any, who would be available for safety duties during the proposed period of the industrial action. Whilst, at the hearing, this safety issue was resolved, by agreement, that fact does not assist the respondent in relation to the question of the efficacy of the Protected Action Notice: a question which falls to be considered in light of the content of the Notice, unaffected by the agreement reached at the hearing before me.


case_outcome: followed

case_text: I am satisfied that I have such power: DG Whelan Rentals Pty Ltd v Australian Building Construction Employees' and Builders Labourers' Federation (1982-83) 46 ALR 339 at 346-347 and 349; Amcor Packaging (Australia) Pty Ltd v Automotive, Food, Metals, Engineering, Printing and Kindred Industries Union [2001] FCA 874 at [14] .


case_outcome: referred to

case_title: Liquor, Hospitality and Miscellaneous Union - Western Australian Branch v CSBP Limited [2007] AIRC 112

case_text: The applicant contended in the Commission before Lawler VP that it was not open under the Act for a union to initiate a bargaining period naming other unions as negotiating parties and accordingly it was submitted that the Initiating Notice was invalid and did not initiate a bargaining period. The Commission upheld the validity of the Initiating Notice: Liquor, Hospitality and Miscellaneous Union Western Australian Branch v CSBP Ltd [2007] AIRC 112 ("the first Commission case"). 20 Lawler VP in so finding said relevantly: [14] It is certainly arguable, as CSBP submits, that the effect of s 423 is that, while an employer is able to initiate a single bargaining period with more than one union as negotiating parties (see s 423(1) ,(3)), where a particular union initiates a bargaining period, only that union and the employer are negotiating parties (see s 423(1) and (4)) and that, accordingly, other unions who may wish to be part of the proposed collective agreement with the employer cannot be "negotiating parties" in relation to that particular bargaining period: 21 He continued: To the extent that s 423 has the effect of preventing a union from initiating a bargaining period in which other unions are negotiating parties, I can see nothing in the legislation that would render invalid a notice by a union initiating a bargaining period merely because it (incorrectly) names other unions as a negotiating party. If s 423 has the effect for which CSBP contends then those other unions do not in fact become "negotiating parties" (in the particular bargaining period initiated by the giving of the notice) notwithstanding that they are named as "negotiating parties" in the notice. However, it does not automatically follow that the notice thereby becomes invalid or otherwise ineffective in initiating a bargaining period to which the employer and notifying union are negotiating parties. [17] (Emphasis added) Section 423(3) specifies how the bargaining period is initiated. Even if CSBP, as employer, is the only other person who can be a "negotiating party" to a bargaining period initiated by the LHMU in relation to CSBP employees in this case the LHMU gave "written notice ... to each other negotiating party and to the Commission stating that the initiating party intends to try to make a collective agreement to which this section applies ... with the other negotiating parties under ... 328" as required by s 423(3). The fact that the notice was also given to other persons as "negotiating parties" does not detract from the fact that the requirements of s 423(3) have been satisfied. [18] 24 The protected action ballot order made by Lawler VP was, according to counsel for the respondent, revoked upon the application of the respondent. A further application for a protected action ballot order was then made relying upon the Initiating Notice and came on for hearing before Commissioner Smith of the Commission on 2 March of this year. The Commissioner in an ex tempore decision made a protection action ballot order. The Commissioner's edited reasons were published on 8 March 2007: Liquor, Hospitality and Miscellaneous Union v CSBP Limited (PR976337) ("the second Commission case"). The points taken by the applicant before Lawler VP as to the invalidity of the Initiating Notice were re-argued before Commissioner Smith. In his reasons the Commissioner adopted, without more, the reasoning of Lawler VP, in the first Commission case, in finding that there was a valid bargaining period and in effect a valid initiating notice. 25 As of 23 March 2007, the applicant had reached agreement on all terms of a new workplace agreement with the respondent except in respect of "backpayment of allowances". As at 26 March those issues were resolved save for issues said to have been specific to chemicals. 26 As at 30 March 2007 the remaining issues concerned shift cover and chemical operator levels. 62 The applicant contended that: (i) protected industrial action can only occur during a bargaining period: ss 435(1) and (2). The Protected Action Notice indicates that employees will take industrial action "in respect of the notice of bargaining period BP 2007/8". The Initiating Notice was directed to 3 "other negotiating parties" (the applicant, the AMWU and CEPU) and stated that the respondent intended to try to make a collective agreement with the other negotiating parties. The particulars (at paragraph (b) of the Protected Action Notice) confirmed that the proposed collective agreement sought in the bargaining period was one binding the applicant, the respondent, CEPU and AMWU; (ii) there is no provision in the Act which allows a union to initiate a bargaining period in pursuit of a multi-union agreement. Where a union initiates a bargaining period the only other negotiating party is the employer: s 423(3) and (4). The ability to initiate a bargaining period with more than one union is confined to employers: s 423(4)(c). A defect of this kind is no mere technicality. The effect of a bargaining period is to modify existing legal rights. A union that is a negotiating party may take protected action: s 435(2). Severance is not possible because it will substantially alter the nature of the proposed collective agreement sought in the bargaining period (as confirmed by the particulars). The inclusion of the CEPU and AMWU as "Other Negotiating Parties" was not a "slip". Both the particulars and the factual matrix in which the notice was served confirm that the respondent intended to negotiate an agreement with the applicant and the other 2 unions. The expired CSBP Agreement was an agreement between the applicant and the 3 unions and, since April 2006, the applicant and the 3 unions had been negotiating a new agreement to replace the expired agreement. Further, even if the references in the Initiating Notice to the AMWU and CEPU could be severed, it is seriously arguable that the notice would only then be valid so that a bargaining period would not come into effect for a further 7 days: s 427 of the Act ; (iii) whereas a challenge to the validity of the Initiating Notice was rejected by Lawler VP in LHMU v CSBP Limited [2007] AIRC 112 , PR976150, at [17]-[18], and a similar challenge under the pre-reform Act was rejected by a Full Bench of the Commission in APRA v CPSU & Anor , 21 June 2000, Print S7131 at [12], [14], [21]-[22], those decisions should not be followed. The point which arises in this case, and which was not addressed in those decisions, is not merely that the CEPU and AMWU have been erroneously named as negotiating parties in the respondent's notice. It is that the proposed collective agreement referred to in the Initiating Notice was particularised as, and was intended to be, an agreement between the respondent, the applicant and the CEPU and AMWU and that, by reason of s 423(4)(d) , a union cannot initiate a bargaining period under the Act which would entitle it to take protected industrial action in support of a multi-union agreement; (iv) under s 435(2) of the Act , industrial action organised or engaged in during the bargaining period may be protected action but only if it is organised or engaged in for the purpose of supporting or advancing claims made in respect of "the proposed collective agreement": s 435(2). The "proposed collective agreement" is that to which the bargaining period is directed [s 423(3)]: Trinity Garden Aged Care & Anor v ANF , 21 August 2006, PR973718, at [43]. Accordingly, if the Initiating Notice is held to be valid, the result will be that the respondent will seemingly be entitled to take protected industrial action to cause the respondent to make an agreement with the respondent, the CEPU and the AMWU. Such an outcome is inconsistent with s 423(4)(d) which clearly evinces an intention that if a bargaining period is to be initiated in pursuit of a multi-union agreement (with the possibility that industrial action will then be taken in support of such an agreement), it must be initiated by the employer; (v) the contrast with s 423(4)(c) , which expressly allows for more than one organisation to be a negotiating party where the initiating party is the employer, is telling. This is not a curious result. It is quite easy to envisage why Parliament would not have wished to give unions the ability to take industrial action to cause an employer to enter into a multi-union agreement, irrespective of the wishes of the employer. It is quite possible that Parliament considered the employer was best placed to determine whether a multi-union agreement was suited to the needs of the particular business and therefore that the employer should not be pressured into making a multi-union agreement if it did not wish to. The fact that, in the present case, the applicant is prepared to negotiate a multi-union agreement is not to the point. What is at issue is the capacity of the respondent union to initiate a bargaining period in pursuit of a multi-union agreement; and (vi) if, as appears from s 435(2) , a union cannot initiate a bargaining period in pursuit of a multi-union agreement, there is at least a serious question to be tried that the respondent's Initiating Notice was invalid such that no bargaining period was initiated and the proposed industrial action will be unprotected and unlawful.


case_outcome: cited

case_text: The respondent, without any additional submissions, later, by email, referred the Court to the following further decisions: Automotive, Food, Metals, Engineering, Printing & Kindred Industries Union v Ardmona Foods Limited [2006] FCA 1039 ; Blagojevch v Australian Industrial Relations Commission [2000] FCA 483 at [13] et seq; Miller v University of New South Wales [2002] FCA 882 [68] et seq especially [74], [79].


case_text: Alternatively, so the respondent submitted, as a matter of discretion, the applicant should not be permitted to dispute the validity of the notice initiating the bargaining period because that issue has already been decided twice, even if, on a strict application of the doctrine of issue estoppel, it does not apply. It cited in support Spalla v St George Motor Finance Ltd (No 6) [2004] FCA 1699 , at [66]-[67], per French J; Walton v Gardiner [1992] HCA 12 ; (1993) 177 CLR 378 per Mason CJ, Deane and Dawson JJ at 393; Sea Culture International Pty Ltd v Scoles (1991) 32 FCR 275 at 279 per French J.


case_title: Spalla v St George Motor Finance Ltd (No 6) [2004] FCA 1699


case_text: In further written submissions provided during the morning of 4 April 2007 the respondent contended that issue estoppel is not limited in its operation to issues decided by a court exercising judicial power but extends to other tribunals. It relied upon The Administration of the Territory of Papua and New Guinea v Daera Guba [1973] HCA 59 ; (1972-3) 130 CLR 353 at 452 per Gibbs J where his Honour considered the case of Stiftung v. Rayner & Keeler Ltd (No. 2) (1967) 1 AC 853 and also Stephen J at 460; Barwick CJ at 402, McTiernan and Menziess JJ agreeing. It referred also to the discussion by Pincus J in Bogaards v McMahon (1988) 80 ALR 342 at 350 et seq.


case_title: The Administration of the Territory of Papua and New Guinea v Daera Guba [1973] HCA 59 ; (1972-3) 130 CLR 353


case_text: The applicant contended that: (i) protected industrial action can only occur during a bargaining period: ss 435(1) and (2). The Protected Action Notice indicates that employees will take industrial action "in respect of the notice of bargaining period BP 2007/8". The Initiating Notice was directed to 3 "other negotiating parties" (the applicant, the AMWU and CEPU) and stated that the respondent intended to try to make a collective agreement with the other negotiating parties. The particulars (at paragraph (b) of the Protected Action Notice) confirmed that the proposed collective agreement sought in the bargaining period was one binding the applicant, the respondent, CEPU and AMWU; (ii) there is no provision in the Act which allows a union to initiate a bargaining period in pursuit of a multi-union agreement. Where a union initiates a bargaining period the only other negotiating party is the employer: s 423(3) and (4). The ability to initiate a bargaining period with more than one union is confined to employers: s 423(4)(c). A defect of this kind is no mere technicality. The effect of a bargaining period is to modify existing legal rights. A union that is a negotiating party may take protected action: s 435(2). Severance is not possible because it will substantially alter the nature of the proposed collective agreement sought in the bargaining period (as confirmed by the particulars). The inclusion of the CEPU and AMWU as "Other Negotiating Parties" was not a "slip". Both the particulars and the factual matrix in which the notice was served confirm that the respondent intended to negotiate an agreement with the applicant and the other 2 unions. The expired CSBP Agreement was an agreement between the applicant and the 3 unions and, since April 2006, the applicant and the 3 unions had been negotiating a new agreement to replace the expired agreement. Further, even if the references in the Initiating Notice to the AMWU and CEPU could be severed, it is seriously arguable that the notice would only then be valid so that a bargaining period would not come into effect for a further 7 days: s 427 of the Act ; (iii) whereas a challenge to the validity of the Initiating Notice was rejected by Lawler VP in LHMU v CSBP Limited [2007] AIRC 112 , PR976150, at [17]-[18], and a similar challenge under the pre-reform Act was rejected by a Full Bench of the Commission in APRA v CPSU & Anor , 21 June 2000, Print S7131 at [12], [14], [21]-[22], those decisions should not be followed. The point which arises in this case, and which was not addressed in those decisions, is not merely that the CEPU and AMWU have been erroneously named as negotiating parties in the respondent's notice. It is that the proposed collective agreement referred to in the Initiating Notice was particularised as, and was intended to be, an agreement between the respondent, the applicant and the CEPU and AMWU and that, by reason of s 423(4)(d) , a union cannot initiate a bargaining period under the Act which would entitle it to take protected industrial action in support of a multi-union agreement; (iv) under s 435(2) of the Act , industrial action organised or engaged in during the bargaining period may be protected action but only if it is organised or engaged in for the purpose of supporting or advancing claims made in respect of "the proposed collective agreement": s 435(2). The "proposed collective agreement" is that to which the bargaining period is directed [s 423(3)]: Trinity Garden Aged Care & Anor v ANF , 21 August 2006, PR973718, at [43]. Accordingly, if the Initiating Notice is held to be valid, the result will be that the respondent will seemingly be entitled to take protected industrial action to cause the respondent to make an agreement with the respondent, the CEPU and the AMWU. Such an outcome is inconsistent with s 423(4)(d) which clearly evinces an intention that if a bargaining period is to be initiated in pursuit of a multi-union agreement (with the possibility that industrial action will then be taken in support of such an agreement), it must be initiated by the employer; (v) the contrast with s 423(4)(c) , which expressly allows for more than one organisation to be a negotiating party where the initiating party is the employer, is telling. This is not a curious result. It is quite easy to envisage why Parliament would not have wished to give unions the ability to take industrial action to cause an employer to enter into a multi-union agreement, irrespective of the wishes of the employer. It is quite possible that Parliament considered the employer was best placed to determine whether a multi-union agreement was suited to the needs of the particular business and therefore that the employer should not be pressured into making a multi-union agreement if it did not wish to. The fact that, in the present case, the applicant is prepared to negotiate a multi-union agreement is not to the point. What is at issue is the capacity of the respondent union to initiate a bargaining period in pursuit of a multi-union agreement; and (vi) if, as appears from s 435(2) , a union cannot initiate a bargaining period in pursuit of a multi-union agreement, there is at least a serious question to be tried that the respondent's Initiating Notice was invalid such that no bargaining period was initiated and the proposed industrial action will be unprotected and unlawful. 76 In my opinion there is a serious question to be tried as to whether in the circumstances of this case, the Initiating Notice was valid. I am not immediately persuaded, although I make no decision in this regard, that the reasoning of Lawler VP to which I have referred is correct. In any event, as I earlier foreshadowed, his reasons do not deal with the point which has been raised by the applicant here, namely, whether the addition of the CEPU and the AMWU as negotiating parties were included advisedly in the Initiating Notice (not "incorrectly" as Lawler VP assumed) to the end that the proposed collective agreement referred to in the Initiating Notice was intended to be an agreement between the applicant, the respondent and each of the CEPU and the AMWU. This question in turn raises associated questions not dealt with in either the first Commission case or the second Commission case in any determinative way. These are firstly whether upon the proper construction of s 423(4)(b) of the Act a union can initiate a bargaining period under the Act which would entitle it to take industrial action in support of a multi-union agreement. Secondly there is the effect upon the validity of the Initiating Notice having regard to the provisions of s 435(2) of the Act which provides relevantly that during a bargaining period an organisation of employees that is a negotiating party is entitled, for the purpose of supporting or advancing claims made in respect of the proposed collective agreement to organise or engage in industrial action against the employer. For the purposes of s 423(3) of the Act the "proposed collective agreement" is that to which the bargaining period is directed: Trinity Garden Aged Care v ANF, 21 August 2006, PR973718 at [43]. On one view, as the applicant submits, this would produce the result that the respondent would similarly be entitled to take protected industrial action to cause the applicant to make an agreement not merely with the respondent but with the respondent and each of the CEPU and AMWU. 77 In any event, whatever the position in relation to the question of issue estoppel as it may concern that particular challenge to the Initiating Notice, there was no issue at any time in the Commission concerning the validity of the Protected Action Notice nor could there have been for the obvious reason that this notice was not given until after the protected ballot order had been made by Commissioner Smith. I will now consider that question. 78 In the alternative, the applicant submits that even if there is a valid bargaining period in place there is a serious question to be tried that the Protected Action Notice given by the respondent on 30 March 2007, in purported compliance with s 441 of the Act , did not adequately state the nature of the intended action and was therefore not a valid notice.


case_title: Walton v Gardiner [1992] HCA 12 ; (1993) 177 CLR 378


case_text: The applicant relied upon Woodside Petroleum (WA Oil) Pty Ltd v AIMPE [2005] FCA 403 where a similar issue arose. The notice of intended industrial action served by the union in that case did not make clear whether employees would perform critical safety functions including monitoring of the power supply. The seriousness of the safety issues raised weighed heavily in the balance of convenience: [2005] FCA 403 at [16] - [17] . The applicant also referred the Court to Burswood Resort (Management) Ltd v ALHMWU [1999] FCA 1443 (Carr J) at [13]-[14] (serious question to be tried as to whether "stoppages of work" refers to some or all employees); Burswood Resort (Management) Ltd v CEPU [2004] FCA 909 (Nicholson J) at [12]-[14]. 93 The appropriate defensive action referred to by von Doussa J in Davids Distribution Pty Ltd included, by way of example, the shutting down of a sophisticated item of equipment, although in the context of potential damage to the equipment if precipitately shut down. In this case, whatever be the consideration concerning damage to the plant, there are very substantial safety issues concerned both with the shutting down of the plant safely but also in monitoring the plant whilst it is shut down: see the Woodside Petroleum and Burswood Resort cases referred to above. Arguably the Protected Action Notice should have specified the Process Technicians, if any, who would be available for safety duties during the proposed period of the industrial action. Whilst, at the hearing, this safety issue was resolved, by agreement, that fact does not assist the respondent in relation to the question of the efficacy of the Protected Action Notice: a question which falls to be considered in light of the content of the Notice, unaffected by the agreement reached at the hearing before me.


case_outcome: applied

case_title: Australian Broadcasting Corporation v Lenah Game Meats Pty Limited [2001] HCA 63 , 208 CLR 199

case_text: principles governing the grant or refusal of interlocutory injunctions in both private and public law litigation are well known. They have been summarised by Mason A-CJ in Castlemaine Tooheys Ltd v South Australia [1986] HCA 58 ; (1986) 161 CLR 148 at 153 as follows: In order to secure such an injunction the plaintiff must show (1) that there is a serious question to be tried or that the plaintiff has made out a prima facie case, in the sense that if the evidence remains as it is there is a probability that at the trial of the action the plaintiff will be held entitled to relief; (2) that he will suffer irreparable injury for which damages will not be an adequate compensation unless an injunction is granted; and (3) that the balance of convenience favours the granting of an injunction. An applicant seeking an interlocutory injunction must be able to show sufficient " colour of right " to the final relief, in aid of which the interlocutory injunction is sought: Australian Broadcasting Corporation v Lenah Game Meats Pty Limited [2001] HCA 63 at [11] , [2001] HCA 63 ; 208 CLR 199 at 217 per Gleeson CJ. Kirby J there further observed that " no narrow view has been adopted as to the meaning of the expression 'a serious question to be tried' ": [2001] HCA 63 at [167] , 208 CLR at 270.


case_title: Australian Broadcasting Corporation v O'Neill [2006] HCA 46 , 227 CLR 57

case_text: use of the phrase " a prima facie case " does not require that an applicant must show that it is more probable than not that at a final hearing he will succeed; it is sufficient that the applicant show a sufficient likelihood of success to justify in the circumstances the preservation of the status quo pending a final hearing: Australian Broadcasting Corporation v O'Neill [2006] HCA 46 at [65] , [2006] HCA 46 ; 227 CLR 57 at 82. As Gummow and Hayne JJ there observed, " ... the requisite strength of the probability of ultimate success depends upon the nature of the rights asserted and the practical consequences likely to flow from the interlocutory order sought ": [2006] HCA 46 at [71] , 227 CLR at 84. Notwithstanding the fact that the termination of the Agreement was said to take effect as from 14 April 2009, on 9 April 2009 an undertaking was given by the Respondent not to act upon its decision until the hearing of the interlocutory application on 27 April 2009. That undertaking was then continued until 4.00 pm today. At the forefront of the application for interlocutory relief is the Applicant's contention that the contractual power conferred by clause 16.7 is constrained. The unqualified contractual right to terminate the Agreement " without cause " upon giving 60 days notice in writing, the Applicant contends, was not a right available to be exercised by the Respondent. On a proper construction of the Agreement, the Applicant contends that the Respondent was confined to the exercise of the power conferred by clause 16.4. Alternatively, the Applicant contends that the otherwise unqualified power conferred by clause 16.7 was constrained by either: implied terms; or representations as to the manner in which the rights conferred by the Agreement were to be exercised. To this extent, the implied terms and the representations relied upon in support of the claim under s 52 of the 1974 Act coalesce.


case_text: may in some cases be inferred: Gould v Vaggelas (1984) 157 CLR 215 at 250 per Brennan J. And " [i]t may well be appropriate to infer reliance where the representation in question is of a kind obviously calculated to induce action ": Australian Competition and Consumer Commission v Internic Technology Pty Ltd (1998) 42 IPR 225 at 241 per Lindgren J. A representation of good faith, if made, may provide a case where it is appropriate at an interlocutory hearing to draw such an inference. In the present case such an inference is presently drawn. What further evidence as to reliance may ultimately be adduced by the Applicant at the final hearing remains a matter for it to determine. That further evidence may have to address clause 12 of the Agreement which provides in relevant part as follows: 12 Warranties 12.1 You warrant that: ... (g) You have not relied on any representation made by Telstra which has not been stated expressly in this Agreement. That provision may be more directed to such representations as may have been made prior to the Agreement being executed.


case_title: Castlemaine Tooheys Ltd v South Australia [1986] HCA 58 ; (1986) 161 CLR 148


case_text: relief may be refused where damages are an adequate remedy: e.g. Dickson Property Management Services Pty Ltd v Centro Property Management (Vic) Pty Ltd [2000] FCA 1742 , 180 ALR 485. Ryan J there concluded on the facts of that case that " a related consideration " was that the grant of interlocutory relief would " involve the court, to an unacceptable extent, in supervising the performance of a detailed contract equivalent to a contract for personal services by a party, in whom the other asserts, not totally unbelievably, that it has lost confidence ": [2000] FCA 1742 at [15] , 180 ALR at 487 to 488. Clearly enough, Telstra no longer wishes to have any contractual relationship with the Applicant. Its position is that it has brought what it perceives to be the Applicant's short-comings to its attention and that the Applicant has taken insufficient or inadequate steps to address or resolve the continuing flow of complaints being made. If the Respondent has contravened s 52 or breached a term of the Agreement (express or implied), the position of the Applicant — so Telstra contends — could be addressed by an award of damages. The measure of those damages would be susceptible of easy calculation. If there be an entitlement to damages, those damages would most likely be the remuneration which the Applicant would have received under the Agreement had it not been terminated. No question arises as to the ability of the Respondent to meet any award of damages.


case_text: the outset it should be recognised that s 31A has been said to be a provision which " lowers the bar for obtaining summary judgment ": Dandaven v Harbeth Holdings Pty Ltd [2008] FCA 955 at [5] per Gilmour J. A " reasonable prospect of success " for the purposes of the section is one which is real and not fanciful or merely arguable: White Industries Australia Ltd v Commissioner of Taxation [2007] FCA 511 at [59] , [2007] FCA 511 ; 160 FCR 298 at 312 per Lindgren J; Rogers v Asset Loan Co Pty Ltd [2008] FCA 1305 at [41] , [2008] FCA 1305 ; 250 ALR 82 at 92. And, unlike an application pursuant to O 11 r 16 of the Federal Court Rules 1979 (Cth) that a matter be struck out, where it is the adequacy of the pleadings which is in issue, an action pursuant to s 31A " not only permits, but requires, a consideration of matters outside the pleadings ": Imobilari Pty Ltd v Opes Prime Stockbroking Ltd (in liq) [2008] FCA 1920 at [3] to [8] [2008] FCA 1920 ; , 252 ALR 41 at 43 to 45 per Finkelstein J.


case_text: a question as to jurisdiction arises, a " court is not obliged immediately to refrain from proceeding further ": The Queen v The Judges of the Federal Court of Australia; Ex parte The Western Australian National Football League Incorporated [1979] HCA 6 ; (1979) 143 CLR 190 at 215 per Gibbs J. For present purposes, it is not considered appropriate to resolve any such question in the present proceeding on an interlocutory basis. Whether or not the claims founded upon s 52 may ultimately prevail will be resolved at a final hearing. One of the issues to be then resolved may well include submissions as to jurisdiction. Each case must obviously depend upon its own facts and circumstances. And cases unquestionably arise where this Court entertains applications, including interlocutory applications, to restrain what is otherwise a contractual relationship between the parties: eg, Garry Rogers Motors (Aust) Pty Ltd v Subaru (Aust) Pty Ltd [1999] FCA 903 ; Luce Optical v Budget Specs (Franchising) Pty Ltd [2005] FCA 1486. The prospect of such cases arising is not in issue; the question is whether the present proceeding is a case in which the jurisdiction has been properly invoked.


case_title: Gould v Vaggelas (1984) 157 CLR 215


case_text: from that question is whether the commercial arrangement between the Applicant and the Respondent is susceptible to a term being implied, summarised in oral submissions as a term of " good faith ". For the purposes of the present interlocutory application, it is accepted that such a term may arguably be implied: cf Renard Constructions (ME) Pty Ltd v Minister for Pubic Works [1992] 26 NSWLR 234 ; Hughes Aircraft Systems International v Airservices Australia (1997) 76 FCR 151; Pacific Brands Sport & Leisure Pty Ltd v Underworks Pty Ltd [2005] FCA 288 at [61] to [65] per Finkelstein J. It is not at all self-evident, as is presently contended by the Respondent, that the implication of a term as to " good faith " would be inconsistent with the express terms of the Agreement.


case_title: Imobilari Pty Ltd v Opes Prime Stockbroking Ltd (in liq) [2008] FCA 1920 , 252 ALR 41


case_title: Luce Optical v Budget Specs (Franchising) Pty Ltd [2005] FCA 1486


case_text: the implication of such a term says little as to the content of any such obligation. This is a question which has helpfully been addressed by Barrett J in Overlook Management BV v Foxtel Management Pty Ltd [2002] NSWSC 17. His Honour there observed: [63] But what are the content and effect of such an implied term? This question was the subject of discussion by the Court of Appeal in [ Burger King Corp v Hungry Jack's Pty Ltd [2001] NSWCA 187]. Sheller, Beazley and Stein JJA referred to the observation of Sir Anthony Mason in his 1993 Cambridge Lecture (see now (2000) 116 LQR 66 at 69) that the concept "embraced no less than three related notions", being: "(1) an obligation on the parties to co-operate in achieving the contractual objects (loyalty to the promise itself); (2) compliance with honest standards of conduct; and (3) compliance with standards of conduct which are reasonable having regard to the interests of the parties." ... [68] In many ways, the implied obligation of good faith is best regarded as an obligation to eschew bad faith. This is borne out by the following succinct statement by Lord Scott of Foscote in Manifest Shipping Co Ltd v Uni-Polaris Shipping Co Ltd [2001] 2 WLR 170, a case concerning the duty of good faith in the insurance context: "Unless the assured has acted in bad faith, he cannot, in my opinion, be in breach of a duty of good faith, utmost or otherwise." ... [73] A prohibitory or negative spirit precluding capriciousness will readily be accepted as attending the parties' contracts. The exclusion of capriciousness as an acceptable form of behaviour in the performance of the contract will prohibit conduct which has no rational basis or objective explanation. A prohibitory or negative spirit precluding purely selfish behaviour calculated to destroy the position of the other party will also readily be accepted. It is more difficult to identify the point at which the prohibitory or negative spirit intervenes to preclude conduct which reduces immediate enjoyment (or the quantum thereof) which is undertaken with a view also to enhanced future enjoyment. Whether any term is to be implied, and the content of such terms as may be implied, remain matters to be resolved at a final hearing. Upon the Applicant giving the usual undertaking as to damages, it is considered that interlocutory relief should be granted. But such relief should only be granted for as short a period of time as is consistent with properly preparing the proceeding for an early final hearing. It follows that the Respondent's Notice of Motion seeking judgment pursuant to s 31A of the 1976 Act is dismissed.


case_title: Pacific Brands Sport & Leisure Pty Ltd v Underworks Pty Ltd [2005] FCA 288


case_title: The Queen v The Judges of the Federal Court of Australia; Ex parte The Western Australian National Football League Incorporated [1979] HCA 6 ; (1979) 143 CLR 190


case_title: Renard Constructions (ME) Pty Ltd v Minister for Pubic Works [1992] 26 NSWLR 234


case_title: Rogers v Asset Loan Co Pty Ltd [2008] FCA 1305 , 250 ALR 82


case_text: draft agreement, or statements made in correspondence, in some cases may be ultimately characterised as representations. In other cases they may not: eg, Seven Network Limited v News Limited [2007] FCA 1062 at [3211]. For the purposes of the present application, it is accepted that the provision of a draft agreement and statements made in letters forwarded from the Respondent to the Applicant may be characterised as the making of a representation. An application for interlocutory relief, or an application under s 31A , may in an appropriate case require a review of detailed factual material. In the present proceeding, however, it is considered that that review should be undertaken at a final hearing. It is only at a final hearing that the conduct of the parties, both prior to and during the course of the Agreement, can be fully understood. Notwithstanding the conclusion that it is appropriate to grant interlocutory relief, it should further be recognised even at this stage that it may be questioned whether: the representations were relied upon by the Applicant; any of the conduct of the Respondent was " misleading or deceptive "; and the Respondent acted in any manner contrary to any term which may be implied constraining it to act in good faith. For present purposes, it is nevertheless considered that the Applicant has satisfied each of these requirements on a prima facie basis.


case_title: Re Wakim; Ex parte McNally [1999] HCA 27 , 198 CLR 511

case_text: it is not considered that such matters should be resolved in advance of a final hearing. As a matter of " impression " the best judgment that can presently be made is that there is a sufficient jurisdictional basis upon which this Court should presently proceed: Re Wakim; Ex parte McNally [1999] HCA 27 at [140] , [1999] HCA 27 ; 198 CLR 511 at 585 per Gummow and Hayne JJ. For present purposes, it is considered that a serious question arises as to whether or not there has been a breach of s 52 of the 1974 Act. On balance, it is considered that interlocutory relief should be granted but that the final hearing should be expedited and set down for hearing in early July 2009. A date can hopefully then be set which accommodates the convenience of both existing Counsel and the parties. The parties are to bring in short minutes of order which formulate the interlocutory orders to be made and a timetable to ensure that a final hearing can then take place. That timetable should obviously accommodate (if necessary) any request for particulars, the provision of such particulars and the filing of a defence, the filing of evidence, including an agreed bundle of documents, and discovery limited only to that material necessary for a resolution of the issues. On such materials as are presently before the Court, there is no reason to question the fact that the period between now and a final hearing, a period of about eight weeks, is more than adequate to prepare this case for final hearing. The costs of both interlocutory applications are to be reserved, including the costs of the Respondent's Notice of Motion seeking an order under s 31A of the 1976 Act. The Respondent's Motion is certainly not a Motion without merit. A staged exchange of submissions should also be addressed in the short minutes of order, with all steps concluding no less than one week prior to hearing. Given an assessment, however, that the Applicant's entitlement to interlocutory relief is certainly not an entitlement free from legitimate and substantive argument, liberty to apply should be expressly reserved to the Respondent to apply to have the interlocutory orders varied (or discharged) should events subsequently emerge warranting the making of any such further order in advance of a final hearing. Any further delay on the part of the Applicant may, for instance, warrant the discharge of interlocutory relief. I certify that the preceding sixty-eight (68) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Flick. Associate: Dated: 1 May 2009 Counsel for the Applicant: Mr A J Sullivan QC with Mr B A M Connell Solicitor for the Applicant: PMF Legal Counsel for the Respondent: Mr A J L Bannon SC with Mr N R Murray Solicitor for the Respondent: Freehills Date of Hearing: 27, 29 April 2009 Date of Judgment: 29 April 2009 AustLII: Copyright Policy | Disclaimers | Privacy Policy | Feedback URL: http://www.austlii.edu.au/au/cases/cth/FCA/2009/426.html


case_title: White Industries Australia Ltd v Commissioner of Taxation [2007] FCA 511 , 160 FCR 298


case_text: I would preface my reasons by noting, first the provisions of s 4L, s 4M, s 51(2)(e) and s 87(3) of the TP Act. Section 4L provides: "If the making of a contract after the commencement of this section contravenes this Act by reason of the inclusion of a particular provision in the contract, then, subject to any order made under section 87 or 87A, nothing in this Act affects the validity or enforceability of the contract otherwise than in relation to that provision in so far as that provision is severable." Because of what I say below, I would emphasise that this provision on its proper construction requires severance of offending provisions: see SST Consulting Services Pty Ltd v Rieson [2006] HCA 31 ; (2006) 225 CLR 516 at [51] ; but that it operates subject to any order made under s 87 and it is upon s 87(3) that the respondents rely in particular. 12 Section 4M, a companion provision, provides, insofar as presently relevant, that: "This Act does not affect the operation of: (a) the law relating to restraint of trade in so far as that law is capable of operating concurrently with this Act; ... but nothing in the law referred to in paragraph (a) ... affects the interpretation of this Act." 18 In this matter the respondents seek to do no more than to put that matter in issue, albeit contingently because their primary position is that the restraints are inoffensive at common law in any event. But if they are incorrect in that, and if the restraints are exclusionary provisions the applicants frankly concede they are and contravene s 45(2)(a) , the respondents, as of course, are entitled to apply for an order under s 87(3) to have the restraints varied. They equally are entitled, subject to any order made under s 87 , to have the issue of severance under s 4L determined: see SST Consulting Services Pty Ltd v Rieson . 19 By relying simply upon a common law claim in the present factual setting, the applicants have perforce exposed themselves to the defensive use the respondents seek to make of the TP Act. 20 I grant the leave to amend that has been sought. 120 The respondents have not made submissions to the effect that the offensive parts of the restraints could be severed: cf SST Consulting Services Pty Ltd v Rieson [2006] HCA 31 ; (2006) 225 CLR 516 at [46] ; or that the "reading down" provision of the deed poll would permit the court to make an inoffensive agreement for the parties which they did not make themselves. The obvious reason for their not taking either of these course lies in their TP Act claims to which I now turn. 121 There are four tiers of questions which possibly arise in relation to the respondents' claim. The first is whether as exclusionary provisions, the Deed Poll restraints contravene s 45(2)(a) of the TP Act. The second is whether, on the application of the respondents, the Court should grant relief under s 87(3) of the Act so as to vary the contract in a manner it considers just and equitable. The third is whether, again on the respondents' application, the Court should grant relief under s 87(1) favourable to the applicants by way of varying the Deed Poll's restraints so as to prevent or reduce loss or damage to the applicants. The fourth is whether the offending restraints ought be severed under s 4L of the TP Act. 122 For reasons I later give it is only necessary to deal with the second of these in any detail. 134 I need not repeat here the terms of s 4L save to note that the severance requirement imposed by the section: see SST Consulting Services Pty Ltd v Rieson , at [52]; is expressly made "subject to any order under section 87". I propose to make such an order and that order will render severance under s 4L unnecessary. 135 I will direct the parties to bring in short minutes of order to give effect to my findings and conclusions. Additionally, I would note that while it is provided expressly in the Deed Poll of Restraint that it does not supersede the Heads of Agreement (see cl 7), no relief has been sought in this proceeding in relation to that agreement. 136 I will also direct the parties to file and serve written submissions on costs within seven days of the handing down of these reasons. I certify that the preceding one hundred and thirty-six (136) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Finn. Associate: Dated: 11 December 2007 Counsel for the Applicants: Mr R Whitington QC with Mr N Rochow Solicitor for the Applicants: Cowell Clarke Counsel for the 1 st , 4 th , 7 th & 8 th Respondents: Mr W Wells QC with Mr T Duggan Solicitor for the 1 st , 4 th , 7 th & 8 th Respondents: Kelly & Co Counsel for the 2 nd , 3 rd , 5 th & 6 th Respondents: Mr M Evans Solicitor for the 2 nd , 3 rd , 5 th & 6 th Respondents: Iles Selley Date of Hearing: 22, 23, 24 and 30 October 2007 Date of Judgment: 11 December 2007 Appendix A Appendix B AustLII: Copyright Policy | Disclaimers | Privacy Policy | Feedback URL: http://www.austlii.edu.au/au/cases/cth/FCA/2007/1965.html


case_title: IRAF Pty Ltd v Graham (1982) 41 ALR 209

case_text: Section 51(2) provides for present purposes: "(2) In determining whether a contravention of [s 45] ... has been committed, regard shall not be had: ... (e) in the case of a contract for the sale of a business or of shares in the capital of a body corporate carrying on a business to any provision of the contract that is solely for the protection of the purchaser in respect of the goodwill of the business". I simply note in passing that there is a live issue between the parties as to whether the transaction of which the impugned deed poll was part, was itself a sale contract of a type envisaged by subpara (3). The subpara also gives rise to the question whether, if the deed contained restraints that did not offend the common law of restraint of trade, it would for that reason fall within s 51(2)(e) (assuming the transaction was of the relevant type and the restraints related to the protection of goodwill): cf IRAF Pty Ltd v Graham (1982) 41 ALR 209 at 216. 83 (ix) Protection of customer connection equally can contrive what is the acceptable duration of a restraint, hence the emphasis in the cases on the period reasonably to be allowed (a) to give the covenantee the opportunity "of cementing an old connection and of profiting from an established reputation": Brown v Brown , 490; and to establish a relationship with the customers of the business Carlton & United Breweries Ltd v Tooth & Co Ltd (1986) 7 IPR 581 at 614; and (b) for severing the relationship between the covenantor and those who would patronize the business of the sale: IRAF Pty Ltd v Graham , at 218. 127 In the present case, though, guidance is to be found in s 51(2)(e) in that, as I noted at the beginning of these reasons, it exempts from s 45's purview, any provision of a contract for the sale of a business or of shares in the capital of a body corporate carrying on a business, "that is solely for the protection of the purchaser in respect of the goodwill of the business". It is unsurprising that the view has been expressed that: "[t]he test provided by s 51(2)(e) seems ... to encapsulate the conditions which by the common law are required to bring a restraint relating to a business within the policy of the law": see IRAF Pty Ltd v Graham , at 216."


case_text: Section 87(3) relevantly provides that: "(3) Where: (a) a provision of a contract made, or a covenant given, whether before or after the commencement of the Trade Practices Amendment Act 1977 : (i) in the case of a provision of a contract, is unenforceable by reason of section 45 in so far as it confers rights or benefits or imposes duties or obligations on a corporation; ... the Court may, on the application of a party to the contract ... make an order: (c) varying the contract ... or a collateral arrangement relating to the contract ... in such manner as the Court considers just and equitable." I would again note in passing that the subsection unqualifiedly permits any party to the contract to apply for an order under it whether or not in a separate application. It is not limited to a party burdened by a provision that contravenes s 45 , let alone a party who has suffered, or is likely to suffer, loss or damage by the contravening conduct. In this last respect the subsection appears to be quite unlike s 87(1), (1A), (1B) and (2), each of which conditions the making of their respective orders "upon the court finding that a party to the proceeding has suffered, or is likely to suffer, loss or damage" (emphasis in original): I & L Securities Pty Ltd v HTW Valuers (Brisbane) Pty Ltd [2002] HCA 41 ; (2002) 210 CLR 109 at [46] . The manifest object of s 87(3) is to permit the "restructuring on a just and equitable basis the rights and obligations of parties to contracts which have contravened certain sections [i.e. s 45 , s 45B and s 47] of the Act": Heydon, Trade Practices Law , [18.1830]. The utility of a power so to do is obvious enough. Section 87(3)'s object contrasts with the object of s 87(1), (1A), (1B) and (2) which confer powers to make orders compensating, preventing or reducing loss or damage arising from breaches of the Act: ibid. I would note in passing that s 87(2)(b) would thus envisage that that object may in fact be furthered by an order varying a contract made between the person who suffered, or is likely to suffer, the loss or damage and the person who engaged in the contravening conduct.


case_title: Re A & K Holdings Pty Ltd [1964] VR 257

case_text: I should also note that the Deed Poll of Restraint is, as its name signifies, a deed poll. The covenant of restraint is made in favour of, and for the benefit of, the first seven respondents who are named in the deed. As such, the covenant is enforceable by those respondents: see Re A & K Holdings Pty Ltd [1964] VR 257 at 261-262; Sunderland Marine Insurance Co v Kearney (1851) 16 QB 925 at 938. It is unnecessary for present purposes to enter upon the questions (a) whether a deed poll is properly to be called a "contract" at law at all: cf Chitty on Contracts , Vol 1 at 2-003 (29 th ed, 2004); Furmston (ed), The Law of Contract , 2.135 (2 nd ed, 2003); or (b) whether this deed poll in fact embodies a contract supported by consideration: cf cl 3 of the Deed (not reproduced here); or else is properly to be regarded as a part of the performance of the Heads of Agreement or as part of an entire transaction: cf Norton on Deeds 86-88 (2 nd ed, 1928). Given that the restraints are contained in an enforceable instrument that reflect what has been agreed by all relevant parties, if they are found to be unenforceable because they are exclusionary provisions that contravene s 45(2)(a) , I can see no reason consistent with the purpose and policy of s 87(3) for not treating them as provisions in a "contract" to which the covenantees are parties. To interpret s 87(3) in this way is to do no more than to give it a purposive and contextual interpretation: see CIC Insurance Ltd v Bankstown Football Club Ltd [1997] HCA 2 ; (1997) 187 CLR 384 at 408; Acts Interpretation Act 1901 (Cth), s 15AB.


case_title: Sunderland Marine Insurance Co v Kearney (1851) 16 QB 925


case_title: CIC Insurance Ltd v Bankstown Football Club Ltd [1997] HCA 2 ; (1997) 187 CLR 384


case_text: It may be accepted that where a common law claim alone is made (usually, but not necessarily, not in federal jurisdiction: cf O'Neil v Mann [2000] FCA 1180 ; (2000) 175 ALR 742 at [29] ), a respondent would not characteristically put in issue the possible incapability of the common law operating concurrently with the Act. Often the Act would be of no conceivable relevance in a simple common law claim. But when incapability is properly put in issue, the common law (including its remedies) will be displaced by the operation of the Act (including its remedies and relief) to the extent of that incapability.


case_text: In their final written submissions, the respondents appear to have taken a new tack in relation to goodwill. Relying upon Old Co's 30 June 2005 balance sheet it was annexed to a 29 November 2005 side agreement between Tiger, Mr James and PJMJ they now advance the following figures for (a) current assets of $12.47 million; (b) fixed assets of $6.53 million including $1.73 million for goodwill; and net equity of $3.74 million. It has not been explained what I am to make of these figures or what the $1.73 million figure should be taken actually to signify by reference to then contemporary accounting standards: cf Federal Commissioner of Taxation v Murry [1998] HCA 42 ; (1998) 193 CLR 605 at [13] - [14] . 73 Though I am of the view that, given the provisions of s 4M of the TP Act, it would ordinarily be appropriate first to deal with the TP Act claim before a common law claim, because of the way in which this matter was prosecuted by the applicants and because of the dispute over the respondents' amendments to its defence, I am content to deal with the common law claim first and without regard to any possible impact of the TP Act upon it in the circumstances. 74 Save in one respect to which I will refer below, there is no obvious disagreement between the parties as to the general principles to be applied in testing the validity of covenants in restraint of trade. There are, predictably, differences in matters of emphases and in the alleged utility of analogies selected from the rich bazaar of decided case law. 80 (vi) The most recent elaboration of the legal nature of goodwill by the High Court was in Federal Commissioner of Taxation v Murry at [12] ff. It is unnecessary for present purposes to enlarge upon what was there said other than to note that one of the definitions endorsed by the joint judgment was that of Lord Macnaghten in Inland Revenue Commissioners v Meuller & Co's Margarine Ltd [1901] AC 217 at 223-224 where it was said: "What is goodwill? It is a thing very easy to describe, very difficult to define. It is the benefit and advantage of the good name, reputation, and connection of a business. It is the attractive force which brings in custom. It is the one thing which distinguishes an old-established business from a new business at its first start. The goodwill of a business must emanate from a particular centre or source. However widely extended or diffused its influence may be, goodwill is worth nothing unless it has power of attraction sufficient to bring customers home to the source from which it emanates. Goodwill is composed of a variety of elements. It differs in its composition in different trades and in different businesses in the same trade."


case_text: (i) Public policy lies at the root of the rule that contracts in restraint of trade are, prima facie, unenforceable: see Amoco Australia Pty Ltd v Rocca Brothers Motor Engineering Co Pty Ltd [1973] HCA 40 ; (1973) 133 CLR 288 at 307; Peters (WA) Ltd v Petersville Ltd [2001] HCA 45 ; (2001) 205 CLR 126 at [27] . The only justification for a restraint is if it is reasonable in reference to the interests of the parties and reasonable in the interests of the public: Nordenfelt v Maxim Nordenfelt Guns and Ammunition Co Ltd [1894] AC 535 at 565; Buckley v Tutty [1971] HCA 71 ; (1971) 125 CLR 353 at 376. The two requirements merge to some extent. As Walsh J observed in Amoco (at 307): "... if a restraint is imposed which is more than that which is required (in the judgment of the court) to protect the interests of the parties, that is a matter which is relevant to the considerations of public policy which underlie the whole doctrine, since to that extent the deprivation of a person of his liberty of action is regarded as detrimental to the public interests ... I acknowledge that the consequence of what I have just stated is that there is to some extent a merging of the second branch of the Nordenfelt formulation of the applicable principle with its first branch. But this does not mean that the distinction between them is wholly obliterated. In order to justify a restraint of trade both tests must be satisfied. The restraint must be reasonable in the interests of the parties in that it affords no more than adequate protection to the covenantee 'while at the same time it is in no way injurious to the public' (see the Nordenfelt Case ). It may be that although a restraint satisfies the first requirement it is injurious to the public for some reason other than being in excess of what is reasonable in the interests of the parties." 77 (ii) The onus of establishing that a restraint is reasonable as between the parties rests with the party who puts forward the restraint, while the onus of establishing that it is contrary to the public interest is on the party alleging this: Amoco , at 317. (iii) "The fact that the parties have bargained from a position of equality is ... one of the circumstances to be considered in determining whether the covenants were reasonable, but it does not save from invalidity a covenant found to be unreasonable or contrary to the public interest (see also Creamoata Ltd v Rice Equalization Association Ltd [(1953) [1953] HCA 40 ; 89 CLR 286 at 318]." Per Gibbs J in Amoco , at 317. This is a proposition upon which the parties divide, the respondents emphasising that significant weight should be given in this regard to a commercial agreement reached "after hard bargaining" by parties, which each finds in its interests to accept: Amoco , per Menzies J (in dissent). Whether or not the observations of Menzies J accurately reflects Australian law is not a matter that I need consider as I do not consider that the Heads of Agreement represented "an ordinary transaction between a willing vendor and a willing purchaser": Brown v Brown [1980] 1 NZLR 484 at 489 per Cooke J. I will later return to this matter. 78 (iv) The question of reasonableness is a question of law for the Court which ultimately depends upon "a judgment the reasons for which do not admit of great elaboration": Amoco , at 308. The validity of the restraint is to be determined as at the date of the agreement, though facts occurring after that date may be relevant if they throw light on the circumstances existing at the date of the restraint: Amoco , at 318. 89 The 5 August 2005 agreement cannot on the evidence meaningfully be characterised as embodying an ordinary transaction between a willing vendor and a willing purchaser. The character Mr James gave the dealing which I accept "a walk in walk out on the basis of a quick clear severance so they didn't have to look at each other much longer" comes closer to the transaction described in Brown v Brown , between two brothers who carried on a business together through a corporate vehicle but who could no longer continue in business together (at 489): "... it was a transaction forced on the parties, in effect a case of one partner buying out the other because unhappy differences had made co-operation impossible." I mention this, not for the purpose of inquiring into the adequacy of the consideration for the restraint: cf Amoco , at 316; but rather to indicate that the circumstances surrounding the transaction do not warrant its being characterised as having been "bargained from a position of equality": cf Amoco , 317; and hence to be so considered in determining whether the restraints were reasonable.


case_text: (i) Public policy lies at the root of the rule that contracts in restraint of trade are, prima facie, unenforceable: see Amoco Australia Pty Ltd v Rocca Brothers Motor Engineering Co Pty Ltd [1973] HCA 40 ; (1973) 133 CLR 288 at 307; Peters (WA) Ltd v Petersville Ltd [2001] HCA 45 ; (2001) 205 CLR 126 at [27] . The only justification for a restraint is if it is reasonable in reference to the interests of the parties and reasonable in the interests of the public: Nordenfelt v Maxim Nordenfelt Guns and Ammunition Co Ltd [1894] AC 535 at 565; Buckley v Tutty [1971] HCA 71 ; (1971) 125 CLR 353 at 376. The two requirements merge to some extent. As Walsh J observed in Amoco (at 307): "... if a restraint is imposed which is more than that which is required (in the judgment of the court) to protect the interests of the parties, that is a matter which is relevant to the considerations of public policy which underlie the whole doctrine, since to that extent the deprivation of a person of his liberty of action is regarded as detrimental to the public interests ... I acknowledge that the consequence of what I have just stated is that there is to some extent a merging of the second branch of the Nordenfelt formulation of the applicable principle with its first branch. But this does not mean that the distinction between them is wholly obliterated. In order to justify a restraint of trade both tests must be satisfied. The restraint must be reasonable in the interests of the parties in that it affords no more than adequate protection to the covenantee 'while at the same time it is in no way injurious to the public' (see the Nordenfelt Case ). It may be that although a restraint satisfies the first requirement it is injurious to the public for some reason other than being in excess of what is reasonable in the interests of the parties." 128 It is not necessary for present purposes that I express a concluded view on the correctness of this observation. The burden of the subsection in the end is simply one of statutory interpretation. But what the s 51(2)(e) exception suggests for the purposes of the s 87(3) discretion is that there well could be circumstances in which it would be both appropriate and just and equitable to vary a restraint in a contract associated with the sale of an interest in a business so that it does no more than provide a level of protection that would be acceptable at common law for the policy reasons of the common law. Such an exercise of discretion would be permissible under s 87(3) in an appropriate case even if a provision valid at common law was not saved from contravening s 45 because of s 51(2)(e), i.e. because that provision did not operate in tandem with the common law: cf Peters (WA) Ltd v Petersville Ltd , at [46]-[50]. 129 I am satisfied that the present is a case in which a variation order should be made. I indicated in relation to the laundry hire restraint that I considered a three year period of restraint would appear to be reasonable as between the parties. I equally indicated that, save in relation to its extension into the Barossa Valley, the map tendered by the respondents (Appendix B to these reasons) delineates an area within which it would be reasonable to proscribe competition between the parties in relation to the applicants operating etc a laundry hire business. I also indicated what I consider to be the proper construction to be given the words "operate" and "operation" in the restraint but that, in any event, that meaning indicated what was a reasonable limit to the scope of the activities that could be the subject of an acceptable restraint. 130 Accordingly, I would vary the Restraint clause as it relates to the laundry hire business so as (i) to limit the restraint to conducting, or being involved directly or indirectly, in the conduct of, a laundry hire business; (ii) to limit the area of the restraint to that marked with a line in Appendix B to these reasons commencing at Aldinga and terminating at Barker Inlet but so as to exclude the area to the north between Williamstown, Tanunda and Gawler (i.e. the Barossa Valley); and (iii) to limit the duration of the restraint to three years from the "Completion Date" a date defined in the Heads of Agreement.


case_text: (i) Public policy lies at the root of the rule that contracts in restraint of trade are, prima facie, unenforceable: see Amoco Australia Pty Ltd v Rocca Brothers Motor Engineering Co Pty Ltd [1973] HCA 40 ; (1973) 133 CLR 288 at 307; Peters (WA) Ltd v Petersville Ltd [2001] HCA 45 ; (2001) 205 CLR 126 at [27] . The only justification for a restraint is if it is reasonable in reference to the interests of the parties and reasonable in the interests of the public: Nordenfelt v Maxim Nordenfelt Guns and Ammunition Co Ltd [1894] AC 535 at 565; Buckley v Tutty [1971] HCA 71 ; (1971) 125 CLR 353 at 376. The two requirements merge to some extent. As Walsh J observed in Amoco (at 307): "... if a restraint is imposed which is more than that which is required (in the judgment of the court) to protect the interests of the parties, that is a matter which is relevant to the considerations of public policy which underlie the whole doctrine, since to that extent the deprivation of a person of his liberty of action is regarded as detrimental to the public interests ... I acknowledge that the consequence of what I have just stated is that there is to some extent a merging of the second branch of the Nordenfelt formulation of the applicable principle with its first branch. But this does not mean that the distinction between them is wholly obliterated. In order to justify a restraint of trade both tests must be satisfied. The restraint must be reasonable in the interests of the parties in that it affords no more than adequate protection to the covenantee 'while at the same time it is in no way injurious to the public' (see the Nordenfelt Case ). It may be that although a restraint satisfies the first requirement it is injurious to the public for some reason other than being in excess of what is reasonable in the interests of the parties." 82 (viii) The principal interest protected by restraints on competition on the sale of goodwill is customer connection, the customers being existing or potential customers. The protection of that interest in a given case can contrive what is the acceptable area or scope of a restraint: cf Whitehall v Bradford [1952] 1 Ch 236 esp at 249-250 where a ten mile radius restraint on a retiring partner of a medical practice was unsuccessfully challenged, the evidence establishing that, though the patients on the periphery of that area were small in number they contributed about one-third of the total partnership income; see also Kennett v Crawford [1940] SASR 199; C & S Constructions Pty Ltd v Dawson (1991) 13 ATPR 41-148 and Lloyd's Ships Holdings Pty Ltd v Davros Pty Ltd (1987) 17 FCR 505 at 524. Important in this regard for present purposes are observations of Viscount Maugham in the Privy Council in Connors Brothers Ltd v Connors [1940] 4 All ER 179 at 194 in the context of a covenant taken on the sale of a sardine business not to engage in any such business in Canada: "... the question of reasonableness being a matter of law for the court, it has never yet been supposed that it is necessary in relation to the trade of a large manufacturer or merchant to prove to the satisfaction of the court that the business which the covenant is designed to protect has been carried on in every part of the area mentioned in the covenant. In the cases in which the area has been the whole of England, or a substantial part of it, such as 100 miles or 150 miles from a named town, it has never been held that the covenantee was under an obligation to prove that the business has been carried on in all the towns and villages within the area. In the Nordenfelt case, no attempt was made to prove that all the governments of the world, or even of the civilised world, had ordered goods from the company, though the greater number no doubt had done so. A great deal no doubt depends on the nature of the business and the area in question. In a country of vast spaces, like the Dominion of Canada, it will always be possible, until the population of the country reaches a point now scarcely contemplated, to point to areas where there are only few settlers or inhabitants, and where, accordingly, few, if any, of the goods sold by the manufacturer have penetrated. If, for example, a restrictive covenant were limited to the province of Quebec, it would seldom be possible to prove that the goods were used in every part of that province. However, the goodwill of a business such as is now under consideration could not adequately be protected if the restrictive covenant had to be limited to the towns and villages where actual sales could be proved, whilst leaving the vendor free to establish a business, which would almost certainly be competitive , in all the adjoining places." (Emphasis added. Footnotes omitted.)


case_text: (i) Public policy lies at the root of the rule that contracts in restraint of trade are, prima facie, unenforceable: see Amoco Australia Pty Ltd v Rocca Brothers Motor Engineering Co Pty Ltd [1973] HCA 40 ; (1973) 133 CLR 288 at 307; Peters (WA) Ltd v Petersville Ltd [2001] HCA 45 ; (2001) 205 CLR 126 at [27] . The only justification for a restraint is if it is reasonable in reference to the interests of the parties and reasonable in the interests of the public: Nordenfelt v Maxim Nordenfelt Guns and Ammunition Co Ltd [1894] AC 535 at 565; Buckley v Tutty [1971] HCA 71 ; (1971) 125 CLR 353 at 376. The two requirements merge to some extent. As Walsh J observed in Amoco (at 307): "... if a restraint is imposed which is more than that which is required (in the judgment of the court) to protect the interests of the parties, that is a matter which is relevant to the considerations of public policy which underlie the whole doctrine, since to that extent the deprivation of a person of his liberty of action is regarded as detrimental to the public interests ... I acknowledge that the consequence of what I have just stated is that there is to some extent a merging of the second branch of the Nordenfelt formulation of the applicable principle with its first branch. But this does not mean that the distinction between them is wholly obliterated. In order to justify a restraint of trade both tests must be satisfied. The restraint must be reasonable in the interests of the parties in that it affords no more than adequate protection to the covenantee 'while at the same time it is in no way injurious to the public' (see the Nordenfelt Case ). It may be that although a restraint satisfies the first requirement it is injurious to the public for some reason other than being in excess of what is reasonable in the interests of the parties."


case_title: Brown v Brown [1980] 1 NZLR 484

case_text: (ii) The onus of establishing that a restraint is reasonable as between the parties rests with the party who puts forward the restraint, while the onus of establishing that it is contrary to the public interest is on the party alleging this: Amoco , at 317. (iii) "The fact that the parties have bargained from a position of equality is ... one of the circumstances to be considered in determining whether the covenants were reasonable, but it does not save from invalidity a covenant found to be unreasonable or contrary to the public interest (see also Creamoata Ltd v Rice Equalization Association Ltd [(1953) [1953] HCA 40 ; 89 CLR 286 at 318]." Per Gibbs J in Amoco , at 317. This is a proposition upon which the parties divide, the respondents emphasising that significant weight should be given in this regard to a commercial agreement reached "after hard bargaining" by parties, which each finds in its interests to accept: Amoco , per Menzies J (in dissent). Whether or not the observations of Menzies J accurately reflects Australian law is not a matter that I need consider as I do not consider that the Heads of Agreement represented "an ordinary transaction between a willing vendor and a willing purchaser": Brown v Brown [1980] 1 NZLR 484 at 489 per Cooke J. I will later return to this matter. 83 (ix) Protection of customer connection equally can contrive what is the acceptable duration of a restraint, hence the emphasis in the cases on the period reasonably to be allowed (a) to give the covenantee the opportunity "of cementing an old connection and of profiting from an established reputation": Brown v Brown , 490; and to establish a relationship with the customers of the business Carlton & United Breweries Ltd v Tooth & Co Ltd (1986) 7 IPR 581 at 614; and (b) for severing the relationship between the covenantor and those who would patronize the business of the sale: IRAF Pty Ltd v Graham , at 218. 89 The 5 August 2005 agreement cannot on the evidence meaningfully be characterised as embodying an ordinary transaction between a willing vendor and a willing purchaser. The character Mr James gave the dealing which I accept "a walk in walk out on the basis of a quick clear severance so they didn't have to look at each other much longer" comes closer to the transaction described in Brown v Brown , between two brothers who carried on a business together through a corporate vehicle but who could no longer continue in business together (at 489): "... it was a transaction forced on the parties, in effect a case of one partner buying out the other because unhappy differences had made co-operation impossible." I mention this, not for the purpose of inquiring into the adequacy of the consideration for the restraint: cf Amoco , at 316; but rather to indicate that the circumstances surrounding the transaction do not warrant its being characterised as having been "bargained from a position of equality": cf Amoco , 317; and hence to be so considered in determining whether the restraints were reasonable.


case_text: (v) The seller of the goodwill of a business or a person who relinquishes his or her interest in the goodwill of a business by retirement or sale to the continuing owners: cf Geraghty v Minter [1979] HCA 42 ; (1979) 142 CLR 177 at 193-194; is nonetheless entitled to set up a competing business: see generally Heydon, The Restraint of Trade Doctrine , Ch 8 (2 nd ed, 1999); unless a valid restraint protecting the goodwill of the business has been agreed. As Dixon CJ commented in Butt v Long [1953] HCA 76 ; (1953) 88 CLR 476 at 486: "The goodwill of a business is immune from the danger of the owner exercising his personal knowledge and skill to its detriment and if the purchaser is to take over such goodwill with all its advantages it must in his hands remain similarly immune. Without, therefore, a covenant on the part of the vendor against competition, a purchaser would not get what he is contracting to buy, nor could the vendor give what he is intending to sell. The covenant against competition is therefore reasonable if confined to the area within which it would in all probability enure to the injury of the purchaser."


case_text: (v) The seller of the goodwill of a business or a person who relinquishes his or her interest in the goodwill of a business by retirement or sale to the continuing owners: cf Geraghty v Minter [1979] HCA 42 ; (1979) 142 CLR 177 at 193-194; is nonetheless entitled to set up a competing business: see generally Heydon, The Restraint of Trade Doctrine , Ch 8 (2 nd ed, 1999); unless a valid restraint protecting the goodwill of the business has been agreed. As Dixon CJ commented in Butt v Long [1953] HCA 76 ; (1953) 88 CLR 476 at 486: "The goodwill of a business is immune from the danger of the owner exercising his personal knowledge and skill to its detriment and if the purchaser is to take over such goodwill with all its advantages it must in his hands remain similarly immune. Without, therefore, a covenant on the part of the vendor against competition, a purchaser would not get what he is contracting to buy, nor could the vendor give what he is intending to sell. The covenant against competition is therefore reasonable if confined to the area within which it would in all probability enure to the injury of the purchaser." 95 I am satisfied that the State-wide restraint is unreasonable given the nature and the manner of conduct of laundry hire businesses. While it is not necessary to show that a covenantee actually has carried on, or proposes to carry on, the business in every part of the area specified in the covenant, it nonetheless must be shown that the covenant against competition is confined to the area within which it would in all probability enure to the injury of the purchaser: Butt v Long at 486; Kennett v Crawford , at 203. In ascertaining that area regard may be had to such expansion of the business as might reasonably be contemplated: Lloyd's Ships , at 524.


case_text: (vi) The most recent elaboration of the legal nature of goodwill by the High Court was in Federal Commissioner of Taxation v Murry at [12] ff. It is unnecessary for present purposes to enlarge upon what was there said other than to note that one of the definitions endorsed by the joint judgment was that of Lord Macnaghten in Inland Revenue Commissioners v Meuller & Co's Margarine Ltd [1901] AC 217 at 223-224 where it was said: "What is goodwill? It is a thing very easy to describe, very difficult to define. It is the benefit and advantage of the good name, reputation, and connection of a business. It is the attractive force which brings in custom. It is the one thing which distinguishes an old-established business from a new business at its first start. The goodwill of a business must emanate from a particular centre or source. However widely extended or diffused its influence may be, goodwill is worth nothing unless it has power of attraction sufficient to bring customers home to the source from which it emanates. Goodwill is composed of a variety of elements. It differs in its composition in different trades and in different businesses in the same trade."


case_title: Whitehall v Bradford [1952] 1 Ch 236

case_text: (viii) The principal interest protected by restraints on competition on the sale of goodwill is customer connection, the customers being existing or potential customers. The protection of that interest in a given case can contrive what is the acceptable area or scope of a restraint: cf Whitehall v Bradford [1952] 1 Ch 236 esp at 249-250 where a ten mile radius restraint on a retiring partner of a medical practice was unsuccessfully challenged, the evidence establishing that, though the patients on the periphery of that area were small in number they contributed about one-third of the total partnership income; see also Kennett v Crawford [1940] SASR 199; C & S Constructions Pty Ltd v Dawson (1991) 13 ATPR 41-148 and Lloyd's Ships Holdings Pty Ltd v Davros Pty Ltd (1987) 17 FCR 505 at 524. Important in this regard for present purposes are observations of Viscount Maugham in the Privy Council in Connors Brothers Ltd v Connors [1940] 4 All ER 179 at 194 in the context of a covenant taken on the sale of a sardine business not to engage in any such business in Canada: "... the question of reasonableness being a matter of law for the court, it has never yet been supposed that it is necessary in relation to the trade of a large manufacturer or merchant to prove to the satisfaction of the court that the business which the covenant is designed to protect has been carried on in every part of the area mentioned in the covenant. In the cases in which the area has been the whole of England, or a substantial part of it, such as 100 miles or 150 miles from a named town, it has never been held that the covenantee was under an obligation to prove that the business has been carried on in all the towns and villages within the area. In the Nordenfelt case, no attempt was made to prove that all the governments of the world, or even of the civilised world, had ordered goods from the company, though the greater number no doubt had done so. A great deal no doubt depends on the nature of the business and the area in question. In a country of vast spaces, like the Dominion of Canada, it will always be possible, until the population of the country reaches a point now scarcely contemplated, to point to areas where there are only few settlers or inhabitants, and where, accordingly, few, if any, of the goods sold by the manufacturer have penetrated. If, for example, a restrictive covenant were limited to the province of Quebec, it would seldom be possible to prove that the goods were used in every part of that province. However, the goodwill of a business such as is now under consideration could not adequately be protected if the restrictive covenant had to be limited to the towns and villages where actual sales could be proved, whilst leaving the vendor free to establish a business, which would almost certainly be competitive , in all the adjoining places." (Emphasis added. Footnotes omitted.) 96 It is misleading to suggest that the evidence establishes that Old Co "serviced" Whyalla, Roxby Downs, the Barossa Valley and Victor Harbour. It did nothing of the sort. It did not make its services available in those towns to businesses that wished to avail of them. Rather, for distinctive reasons, Old Co was obliged to or else was willing to make distinct arrangements for a single business in each of those places except the Barossa Valley where it dealt with two businesses. There was no evidence led to suggest that Old Co at the relevant time was proposing or reasonably contemplating an expansion of their ordinary business activities into any of those areas: cf Lloyd's Ships , at 524. Neither was it suggested that, though remotely located, these customers contributed a significant proportion of Old Co's sales revenue: cf Whitehall v Bradford , at 249-250.


case_title: Kennett v Crawford [1940] SASR 199

case_text: (viii) The principal interest protected by restraints on competition on the sale of goodwill is customer connection, the customers being existing or potential customers. The protection of that interest in a given case can contrive what is the acceptable area or scope of a restraint: cf Whitehall v Bradford [1952] 1 Ch 236 esp at 249-250 where a ten mile radius restraint on a retiring partner of a medical practice was unsuccessfully challenged, the evidence establishing that, though the patients on the periphery of that area were small in number they contributed about one-third of the total partnership income; see also Kennett v Crawford [1940] SASR 199; C & S Constructions Pty Ltd v Dawson (1991) 13 ATPR 41-148 and Lloyd's Ships Holdings Pty Ltd v Davros Pty Ltd (1987) 17 FCR 505 at 524. Important in this regard for present purposes are observations of Viscount Maugham in the Privy Council in Connors Brothers Ltd v Connors [1940] 4 All ER 179 at 194 in the context of a covenant taken on the sale of a sardine business not to engage in any such business in Canada: "... the question of reasonableness being a matter of law for the court, it has never yet been supposed that it is necessary in relation to the trade of a large manufacturer or merchant to prove to the satisfaction of the court that the business which the covenant is designed to protect has been carried on in every part of the area mentioned in the covenant. In the cases in which the area has been the whole of England, or a substantial part of it, such as 100 miles or 150 miles from a named town, it has never been held that the covenantee was under an obligation to prove that the business has been carried on in all the towns and villages within the area. In the Nordenfelt case, no attempt was made to prove that all the governments of the world, or even of the civilised world, had ordered goods from the company, though the greater number no doubt had done so. A great deal no doubt depends on the nature of the business and the area in question. In a country of vast spaces, like the Dominion of Canada, it will always be possible, until the population of the country reaches a point now scarcely contemplated, to point to areas where there are only few settlers or inhabitants, and where, accordingly, few, if any, of the goods sold by the manufacturer have penetrated. If, for example, a restrictive covenant were limited to the province of Quebec, it would seldom be possible to prove that the goods were used in every part of that province. However, the goodwill of a business such as is now under consideration could not adequately be protected if the restrictive covenant had to be limited to the towns and villages where actual sales could be proved, whilst leaving the vendor free to establish a business, which would almost certainly be competitive , in all the adjoining places." (Emphasis added. Footnotes omitted.) 95 I am satisfied that the State-wide restraint is unreasonable given the nature and the manner of conduct of laundry hire businesses. While it is not necessary to show that a covenantee actually has carried on, or proposes to carry on, the business in every part of the area specified in the covenant, it nonetheless must be shown that the covenant against competition is confined to the area within which it would in all probability enure to the injury of the purchaser: Butt v Long at 486; Kennett v Crawford , at 203. In ascertaining that area regard may be had to such expansion of the business as might reasonably be contemplated: Lloyd's Ships , at 524.


case_text: (viii) The principal interest protected by restraints on competition on the sale of goodwill is customer connection, the customers being existing or potential customers. The protection of that interest in a given case can contrive what is the acceptable area or scope of a restraint: cf Whitehall v Bradford [1952] 1 Ch 236 esp at 249-250 where a ten mile radius restraint on a retiring partner of a medical practice was unsuccessfully challenged, the evidence establishing that, though the patients on the periphery of that area were small in number they contributed about one-third of the total partnership income; see also Kennett v Crawford [1940] SASR 199; C & S Constructions Pty Ltd v Dawson (1991) 13 ATPR 41-148 and Lloyd's Ships Holdings Pty Ltd v Davros Pty Ltd (1987) 17 FCR 505 at 524. Important in this regard for present purposes are observations of Viscount Maugham in the Privy Council in Connors Brothers Ltd v Connors [1940] 4 All ER 179 at 194 in the context of a covenant taken on the sale of a sardine business not to engage in any such business in Canada: "... the question of reasonableness being a matter of law for the court, it has never yet been supposed that it is necessary in relation to the trade of a large manufacturer or merchant to prove to the satisfaction of the court that the business which the covenant is designed to protect has been carried on in every part of the area mentioned in the covenant. In the cases in which the area has been the whole of England, or a substantial part of it, such as 100 miles or 150 miles from a named town, it has never been held that the covenantee was under an obligation to prove that the business has been carried on in all the towns and villages within the area. In the Nordenfelt case, no attempt was made to prove that all the governments of the world, or even of the civilised world, had ordered goods from the company, though the greater number no doubt had done so. A great deal no doubt depends on the nature of the business and the area in question. In a country of vast spaces, like the Dominion of Canada, it will always be possible, until the population of the country reaches a point now scarcely contemplated, to point to areas where there are only few settlers or inhabitants, and where, accordingly, few, if any, of the goods sold by the manufacturer have penetrated. If, for example, a restrictive covenant were limited to the province of Quebec, it would seldom be possible to prove that the goods were used in every part of that province. However, the goodwill of a business such as is now under consideration could not adequately be protected if the restrictive covenant had to be limited to the towns and villages where actual sales could be proved, whilst leaving the vendor free to establish a business, which would almost certainly be competitive , in all the adjoining places." (Emphasis added. Footnotes omitted.)


case_text: (viii) The principal interest protected by restraints on competition on the sale of goodwill is customer connection, the customers being existing or potential customers. The protection of that interest in a given case can contrive what is the acceptable area or scope of a restraint: cf Whitehall v Bradford [1952] 1 Ch 236 esp at 249-250 where a ten mile radius restraint on a retiring partner of a medical practice was unsuccessfully challenged, the evidence establishing that, though the patients on the periphery of that area were small in number they contributed about one-third of the total partnership income; see also Kennett v Crawford [1940] SASR 199; C & S Constructions Pty Ltd v Dawson (1991) 13 ATPR 41-148 and Lloyd's Ships Holdings Pty Ltd v Davros Pty Ltd (1987) 17 FCR 505 at 524. Important in this regard for present purposes are observations of Viscount Maugham in the Privy Council in Connors Brothers Ltd v Connors [1940] 4 All ER 179 at 194 in the context of a covenant taken on the sale of a sardine business not to engage in any such business in Canada: "... the question of reasonableness being a matter of law for the court, it has never yet been supposed that it is necessary in relation to the trade of a large manufacturer or merchant to prove to the satisfaction of the court that the business which the covenant is designed to protect has been carried on in every part of the area mentioned in the covenant. In the cases in which the area has been the whole of England, or a substantial part of it, such as 100 miles or 150 miles from a named town, it has never been held that the covenantee was under an obligation to prove that the business has been carried on in all the towns and villages within the area. In the Nordenfelt case, no attempt was made to prove that all the governments of the world, or even of the civilised world, had ordered goods from the company, though the greater number no doubt had done so. A great deal no doubt depends on the nature of the business and the area in question. In a country of vast spaces, like the Dominion of Canada, it will always be possible, until the population of the country reaches a point now scarcely contemplated, to point to areas where there are only few settlers or inhabitants, and where, accordingly, few, if any, of the goods sold by the manufacturer have penetrated. If, for example, a restrictive covenant were limited to the province of Quebec, it would seldom be possible to prove that the goods were used in every part of that province. However, the goodwill of a business such as is now under consideration could not adequately be protected if the restrictive covenant had to be limited to the towns and villages where actual sales could be proved, whilst leaving the vendor free to establish a business, which would almost certainly be competitive , in all the adjoining places." (Emphasis added. Footnotes omitted.) 95 I am satisfied that the State-wide restraint is unreasonable given the nature and the manner of conduct of laundry hire businesses. While it is not necessary to show that a covenantee actually has carried on, or proposes to carry on, the business in every part of the area specified in the covenant, it nonetheless must be shown that the covenant against competition is confined to the area within which it would in all probability enure to the injury of the purchaser: Butt v Long at 486; Kennett v Crawford , at 203. In ascertaining that area regard may be had to such expansion of the business as might reasonably be contemplated: Lloyd's Ships , at 524. 96 It is misleading to suggest that the evidence establishes that Old Co "serviced" Whyalla, Roxby Downs, the Barossa Valley and Victor Harbour. It did nothing of the sort. It did not make its services available in those towns to businesses that wished to avail of them. Rather, for distinctive reasons, Old Co was obliged to or else was willing to make distinct arrangements for a single business in each of those places except the Barossa Valley where it dealt with two businesses. There was no evidence led to suggest that Old Co at the relevant time was proposing or reasonably contemplating an expansion of their ordinary business activities into any of those areas: cf Lloyd's Ships , at 524. Neither was it suggested that, though remotely located, these customers contributed a significant proportion of Old Co's sales revenue: cf Whitehall v Bradford , at 249-250.


case_title: Connors Brothers Ltd v Connors [1940] 4 All ER 179


case_text: (ix) Protection of customer connection equally can contrive what is the acceptable duration of a restraint, hence the emphasis in the cases on the period reasonably to be allowed (a) to give the covenantee the opportunity "of cementing an old connection and of profiting from an established reputation": Brown v Brown , 490; and to establish a relationship with the customers of the business Carlton & United Breweries Ltd v Tooth & Co Ltd (1986) 7 IPR 581 at 614; and (b) for severing the relationship between the covenantor and those who would patronize the business of the sale: IRAF Pty Ltd v Graham , at 218.


case_text: This provision does not readily yield up a meaning. The respondents sought to tender a letter from George Anthony's solicitor which commented (inter alia) upon an earlier draft of the dry cleaning restraint. This letter, it is contended, disclosed the common understanding which informed the intended meaning of cl 2.2. I am asked to infer that it so did because of the amendment made to the earlier draft. To that end the respondents rely upon observations of Mason J in Codelfa Construction Pty Ltd v State Rail Authority of New South Wales [1982] HCA 24 ; (1982) 149 CLR 337 at 352-353 where his Honour accepted the possibility of receiving evidence of mutual intention amounting to concurrence as to the meaning to be given to a contractual provision. Here there is no such evidence of concurrence. I am asked to infer that such was the case. At the time, I indicated the difficulty involved in this and the respondents indicated they would supplement the record. This did not happen. Accordingly, I am not prepared to rely on the letter when construing the clause. 110 The clause on its face prohibits the provision of dry cleaning services "in competition with [Old Co]" subject to one limitation which requires the satisfaction of both of two conditions. The prohibition does not apply to dry cleaning services which, at the date of the agreement: (a) were carried out by the applicants or their related entities; and (b) were not carried out by the respondents or their related entities. 111 An evaluation of the reasonableness of the restraint requires first and foremost an answer to the question: What dry cleaning services were provided by Old Co at the date of the Heads of Agreement? It was in relation to the provision of those services that the general prohibition on competition (subject to the limitation) was, seemingly, intended to operate.