Alamdo Holdings Pty Limited v Australian Window Furnishings (NSW) Pty Limited & Anor

The parties to this proceeding were Alamdo Holdings Pty Limited (the applicant) and Australian Window Furnishings (NSW) Pty Limited and another (the respondents). The dispute concerned the interpretation and application of a restraint of trade clause within a contract for the sale of a business. The matter came before the High Court of Australia.

The central legal issue before the High Court was whether the restraint of trade clause, which sought to prevent the vendor from engaging in a competing business within a specified geographical area and for a defined period, was reasonable and therefore enforceable. This involved considering the scope of the restraint in terms of its geographical reach and duration, and whether it went beyond what was necessary to protect the legitimate interests of the purchaser.

The High Court held that the restraint of trade clause was void for being unreasonable. The Court reasoned that the geographical scope of the restraint was too broad, extending to areas where the vendor had no established business or customer connections at the time of the sale. The Court applied the established legal principles governing restraints of trade, which require such restraints to be no wider than is reasonably necessary to protect the legitimate interests of the party seeking to enforce the restraint, such as goodwill. The Court found that the restraint sought to protect more than just the goodwill of the business sold and was therefore an unreasonable restriction on the vendor's ability to earn a livelihood.

The High Court ordered that the appeal be dismissed.