Andrews Advertising Pty Limited v Andrews

Andrews Advertising Pty Limited (the applicant) sought an interlocutory injunction against Mr. Andrews (the respondent) to restrain him from breaching a restraint of trade clause contained within a deed of sale of a business. The applicant argued that the respondent, having sold his advertising business to the applicant, was now operating a competing business in contravention of the restraint. The matter came before Emmett J of the Supreme Court of New South Wales.

The primary legal issue before the court was whether the restraint of trade clause in the deed of sale was valid and enforceable. Specifically, the court had to determine if the restraint was wider than reasonably necessary to protect the legitimate interests of the applicant, considering the geographical scope and the duration of the restriction. The applicant sought to prevent the respondent from engaging in advertising services within a 50-kilometre radius of the Sydney CBD for a period of two years from the date of sale.

Emmett J considered the principles governing restraints of trade, noting that such clauses are prima facie void as being contrary to public policy unless they can be shown to be reasonable. The reasonableness is assessed by reference to the interests of the parties and the public. His Honour found that the restraint, as drafted, was wider than necessary to protect the goodwill of the business sold. The evidence did not establish that the business had a significant client base or conducted operations extending to the full 50-kilometre radius, nor that the two-year duration was justified for the protection of that goodwill. The court applied the principle that a restraint must be no wider than is necessary to protect the vendor's legitimate business interests, such as goodwill, and that the burden of proving reasonableness lies with the party seeking to enforce the restraint.

The application for an interlocutory injunction was dismissed.