Australasian Memory Pty Ltd v Brien

Australasian Memory Pty Ltd and another appealed to the New South Wales Court of Appeal against a decision of the Supreme Court of New South Wales. The dispute concerned the enforceability of a restraint of trade clause contained within an employment agreement between the appellant company and the respondent employee. The respondent had resigned from his employment and subsequently commenced work with a competitor.

The primary legal issue before the Court of Appeal was whether the restraint of trade clause, which purported to prevent the respondent from engaging in a competing business for a period of 12 months following the termination of his employment, was reasonable and therefore legally enforceable. This involved considering the scope of the restraint, its geographical reach, and the legitimate business interests the employer sought to protect.

The Court of Appeal, applying established principles of contract law concerning restraints of trade, found that the clause was unreasonably broad and therefore void. The court reasoned that the restraint went beyond what was necessary to protect the employer's legitimate proprietary interests, such as confidential information or customer connections. The breadth of the restriction, encompassing a wide range of activities and a significant geographical area, was deemed to be an undue impediment to the respondent's ability to earn a living in his chosen profession. The court affirmed that restraints of trade are prima facie void unless they can be shown to be reasonable as between the parties and not contrary to public interest.

The appeal was dismissed, and the restraint of trade clause was declared unenforceable.